Friday, September 02, 2016

UBS: This Is The End
Of The Credit Cycle,
A Crash Is Coming
UBS thinks the risk of a stock market crash is growing .. The era of cheap debt and plentiful liquidity is slowly drawing to an end, according to a team of UBS analysts led by Paul Winter, making it harder to use credit to juice corporate profits .. "77% of stock crashes are driven by earnings announcements .. We believe we are witnessing the end of the credit cycle. Earnings growth rates are flat and the stock market impact has been increasing .. Importantly, from a risk perspective, Systemic Risk is rising, and Economic Policy Uncertainty has hit all-time highs .. Equities in general are trading at very high multiples, which makes sense given the level of bond yields, however, this doesn't appear to be pricing the level of macro risk that we're witnessing in the market .. In a world of heightened macro factor, systemic and economic policy risk, we should expect higher levels of equity market volatility."
LINK HERE to the article

No comments: