Wall Street on High Alert! Veteran Trader Warns: A Severe Economic "Crash" Is Approaching

FX168 Financial News Agency (Asia-Pacific) — A veteran market trader has issued a warning that, given weakening market signals, a significant economic and stock market downturn may be imminent.

(Screenshot source: Finbold)

Renowned trader Todd “Bubba” Horwitz said in an August 4 interview with David Lin that although US stocks are still trading near all-time highs, he remains concerned about the market's long-term outlook.

Previously, the market experienced sharp volatility influenced by Federal Reserve policy expectations, and then the Dow Jones Industrial Average, S&P 500, and Nasdaq all witnessed strong rebounds.

Horwitz believes that the abnormal behavior of the Chicago Board Options Exchange Volatility Index (VIX) is currently one of the clearest warning signals.

Despite sharp increases in major US stock indices, the VIX has barely changed. In normal market environments, a strong stock market rally is typically accompanied by a decrease in expected volatility.

Horwitz said: “The volatility index should be much lower. This is sending me a warning: this round of buying may be close to ending, maybe it can continue until tomorrow. I don't intend to predict the exact timing, but I can give a long-term judgment — I still maintain my previous view, a major crash is imminent.”

He believes that the divergence between rising stock markets and volatility indicates that buying momentum may be fading, and large institutional investors are not fully participating in this rally.

Horwitz pointed out that commercial traders seem to be waiting for opportunities to short or sell, rather than actively following the market rally.

He also specifically mentioned that abnormally low trading volumes are another worrying signal. The trading volume during the recent market rise has been significantly below normal levels, which often raises questions about the strength and sustainability of the rebound.

Although markets with low trading volume may still continue to climb slowly, Horwitz warned that such market action typically lacks the confidence and capital support of a healthy bull market.

Impact of international market risks

In addition to the US market, Horwitz also cited several international developments, believing that these factors could further intensify the risk of a stock market crash, including weakness in Asian markets, concerns over the Japanese yen, and ongoing government intervention in foreign exchange markets around the world.

He emphasized that repeated market interventions usually only delay the outbreak of problems, rather than solve the underlying financial imbalances — and may even create more serious challenges in the future.

The interest rate outlook is also one of the key factors in Horwitz’s prediction of a potential major crash.

This veteran trader pointed out that inflation remains persistently high, warning that interest rates may rise rather than fall in the coming months.

Therefore, he expects long-term US Treasury yields to continue rising, thereby creating greater pressure on the stock market, borrowing costs, and economic growth.

Horwitz also said that if the Federal Reserve eventually starts cutting rates sharply, it may not indicate that the economic environment is improving—rather, it could signal even greater economic weakness or that the bank system has come under renewed stress.

Although his long-term stance is pessimistic, Horwitz admitted that it is still very difficult to accurately judge when the market will turn downward.

Nevertheless, he still maintains that the multiple warning signals currently appearing indicate that the overall economy and financial markets are facing ever-increasing risks.