Sunday, September 04, 2016

The Coming Storm For Financial Markets
"Global growth is weak, and will be eroded further by Brexit. Oil prices are low, and likely to plunge further. The world has excess capacity and a wage-depressing labor surplus. Corporate profits are shaky. And deflation is laying bare the impotence of central banks. So where would you logically expect financial markets to be going, given that economic, financial and political environment .. Even if the political climate improves after the election, and the spending taps are turned on in the U.S., investors may still be too relaxed about the outlook. The VIX index, a measure of expected future stock market volatility, remains at historically low levels. The S&P 500 index is up about 6.2 percent this year. But Europe offers an example of what might happen if things reverse. The region's benchmark Stoxx 600 index is down more than 5 percent this year, erasing almost all of 2015's gains. In this environment, investors should hold universally-large cash positions until there's a clearer picture of what comes next."
- Gary Shilling
LINK HERE to the essay

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