Brace for the S&P 500 to crash 30% before an even bigger collapse after the election, markets guru David Brady warns

• Expect the S&P 500 to tumble 30%, recover, then suffer a historic crash, David Brady warned.
• He predicted the Federal Reserve would shore up the market before the election.

Prepare for stocks to plunge 30%, rebound before the presidential election, then crash to their lowest level in 14 years, a markets analyst warned.

The S&P 500 is poised to plummet from over 5,000 points to an 18-month low of 3,500 points, David Brady said on the latest "Thoughtful Money" podcast episode.

Brady is a money manager, former foreign exchange trader, and the author of "The FIPEST Report" which analyzes metals and miners. He argued that stocks are massively overvalued, investors face much greater downside risk than potential upside, and a sell-off looks assured.

However, he predicted the Federal Reserve would step in to reverse the coming decline by cutting interest rates and growing its balance sheet — especially as the Biden administration will want a strong stock market and economy going into the November election.

However, he cautioned the rebound wouldn't last given mounting domestic and international pressure on the economy.

"My two cents is short term, 20-30% drop, but then the Fed responds as it always does and the market goes up," Brady said. "After the election, stocks are going to get hammered."

"I expect the stock market to drop because of what's going on in the economy and elsewhere in the world," he said about his anticipated post-election decline.

Brady's list of concerns includes inflation climbing to 3.5% over the past two months, meaning the Fed might keep rates higher for longer. He also flagged an uptick in bankruptcies, car repossessions due to auto-loan defaults, credit-card delinquencies, and a slide in house prices.

"Those are signs to me that the economy is on life support," he said, adding that multiple foreign wars and pressure on the banking sector contributed to a gloomy backdrop.

"I believe the market is plateauing as well, and there are certain signals that I'm watching that will tell me it's time to get the heck out of Dodge," Brady said. Those signals include a decline in the S&P below 5,000 points or a deinversion of the yield curve, he noted.