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Market Still Set to Fall 35% in 2012: Schoenberger


In late 2011 The BlackBay Group's Todd Schoenberger confidently predicted on Breakout that the stock market would fall 20% by mid-2012 and 35% by the end of the year. History has not been kind to the prediction thus far.

The S&P500 closed 2011 around 1,257 and is up 11.6% is up through April 27th. In order to reach Schoenberger's predictions the S&P500 would have to drop 400pts to 1,006 by the end of June and fall 42% to 817 by year end.

In the attached video Schoenberger explains whether or not he stands behind his prediction and what he sees as the catalyst for such dramatic declines. "So far I was wrong," he concedes, but he maintains the worst is yet to come.

With QE3 on the back burner, slowing corporate earnings growth, and "debt bombs in China," Schoenberger says he simply can't get excited about the market. "You cannot tell me the macro data is going to support any type of sustainability."

This is a particularly good week for Schoenberger to bring up macro data as we have a slew of it on the menu.

Tuesday morning will see the release of ISM (53 estimated) and Auto Sales (14.4mm). From there we get the jobs numbers that are likely to set the tone for the near term.

Wednesday morning the widely watched ADP survey is released, giving us a snapshot of private payroll growth. ADP said 209k jobs were added to the economy in March; anything below that will be viewed poorly. Thursday has jobless claims which have been trending discouragingly higher and are estimated to recover slightly to a level of 379k versus last week's 388k.

Finally, the big daddy of them all is Non-Farm Payrolls in the April Jobs report out on Friday morning. Last month saw an additional 120k jobs added to the economy. Estimates this month are for 165k with the unemployment rate staying at 8.2%.

The bears have the data rolling in their favor for the first time in 2012. The global situation is deteriorating and the trend in U.S. data has been soft since last month's jobs report. If this year is going see a replay of last year's near-20% drop over the summer, it's likely to start now.