Here it comes! The financial disaster that market watchers have warned us about for the past 5 years is fast approaching, 2016 could be a rock and roll year.
RBS has advised clients to brace for a
“cataclysmic year” and a global deflationary crisis, warning that major stock
markets could fall by a fifth and oil may plummet to $16 a barrel.
The bank’s credit team said markets are
flashing stress alerts akin to the turbulent months before the Lehman crisis in 2008. “Sell
everything except high quality bonds. This is about return of capital, not
return on capital. In a crowded hall, exit doors are small,” it said in a
client note.
Andrew Roberts, the bank’s research
chief for European economics and rates, said that global trade and loans are
contracting, a nasty cocktail for corporate balance sheets and equity earnings.
This is particularly ominous given that global debt ratios have reached record
highs.
All eyes are on China.
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