There’s no doubt that this week’s global selloff has got investors spooked, but what is definitely open for debate is whether the downturn will grow in to a full-blown recession -- or just mark a healthy and much needed correction.
When even Fed Chairman Ben Bernanke and former Fed Chairman Alan Greenspan seem to be saying different things about the future of the U.S. economy, the battle between the bulls and the bears has rarely been more divided.
“We could have a 30 to 50% decline (in the S&P) sometime over the next two years,” David Tice, president of The Prudent Bear Fund, told “Squawk Box.” He thinks that markets are at the start of a long-term bear trend.
“We see longer term economic problems, we see asset inflation that’s been fuelled by massive credit increases,” he added.
In order to get a 30 to 50% decline “you have to have a global recession, and right now the global economy is pretty strong all things considered,” disagreed Joseph Quinlan, chief market strategist at the Bank of America.
“We’ll see a deceleration but there’s a lot of consumption, a lot of investment around the world, also here in the U.S.,” said Quinlan.
Quinlan hasn’t changed his targets for returns from equities since seeing this week’s events, but does suggest moving away from emerging markets and into high-quality, large-cap U.S. stocks.
Tice favors the more defensive play of investing in precious metal companies, including uranium stocks and gold and silver mining companies, because "it’s a great hedge against the falling dollar and against the reckless credit market.”