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‘Dangerous territory’: Investor Peter Boockvar warns recession is spreading to other areas of economy

There might be no escape from recession.

The most recent reports on housing and manufacturing, in accordance with investor Peter Boockvar, suggest it’s rapidly spreading to other areas of the economy.

“Folks are not being sensitive enough to the economic slowdown and what it will likely be mean for corporate earnings and income,” the Bleakley Advisory Group chief investment officer told CNBC’s “Fast Money” on Monday.

The National Association of Home Builders/Wells Fargo HOUSING MARKETPLACE Index dropped into negative territory in August. This is actually the eight month in a row builder confidence fell. In a news release, NAHB chief economist Robert Dietz said, “Tighter monetary policy from the Federal Reserve and persistently elevated construction costs have induced a real estate recession.”

Boockvar predicted a housing collapse almost exactly this past year on CNBC’s “Trading Nation.” He warned the Federal Reserve was stoking another property price bubble which will get rid of home equity.

A long-time Fed critic, he expects the central bank to produce a serious error since it raises interest levels and tightens monetary policy to fight inflation.

‘Dangerous territory’

“In the event that you look at previous rate hiking cycles, it had been lower and lower degrees of a Fed funds rate that began to break things,” said Boockvar. “But each successive rate hiking cycle ended prior to the previous one because something broke. So, now we strat to get into dangerous territory where things are in threat of breaking.”

There is another discouraging economic report on Monday. THE BRAND NEW York Fed’s Empire State Manufacturing Survey for August plunged by 42 points. It had been linked with a collapse in new orders and shipments. Boockvar called it an “ugly report” in an email.

The major indexes started the week in the green. The Dow saw its fourth positive day in a row. The S&P 500 and the tech-heavy Nasdaq closed higher for the 3rd amount of time in four sessions.

But Boockvar suggests the rally is on thin ice because it’s early in a downturn. He lists three stages of a bear market and suggests investors come in denial.

“I could argue that we’re actually just beginning… part number 2 where growth is slowing and we’re realizing the effect on earnings, particularly income,” he said. “It has a methods to go to sort out door number 2.”

But Boockvar believes investors can still earn money. In this environment, he recommends value names over momentum tech.

“Value continues to be likely to well outperform growth,” said Boockvar, a CNBC contributor. “Valuations in growth stocks, despite having these declines, remain rather expensive where you may still find lots of forgotten value names that curently have low expectations embedded inside them.”

He also likes commodity stocks, including gold and silver coins, gas and oil.

“I’m still pretty bullish on commodities generally, acknowledging the pullback due to worries concerning the demand side,” Boockvar said. “But [I’m] still very bullish on the supply-side challenges.”

On Monday, WTI crude fell almost 3% to close at $89.41 a barrel after hitting its lowest level since Feb. 3 early in the day.

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