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 credit chief, 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.…Second leg down in the GFC?
Steve Keen has been waving a red flag over private debt, too.
The Telegraph
RBS cries 'sell everything' as deflationary crisis nears
Ambrose Evans-Pritchard
7 comments:
Won't make it even to the presidentials. Fading this too...
"Morgan Stanley has also slashed its oil forecast, warning that Brent could fall to $20 if the US dollar keeps rising."
Should be: If Brent price is cut to $20 the USD will keep rising...
This is how economists look at it:
US imports 10M bpd of crude at $100/bbl so economists say: "global trade is high at $1B per day!!"
Then the oil people reduce the price of their oil to $30/bbl and the economists say: "global trade has collapsed to $300m per day!!!!!"
Meanwhile, global trade has STAYED THE SAME at 10M bpd...
The only people not making the same munnie are 1 the ones who have the rights to the oil in the ground and 2 the financiers who work off a % of price.... but everybody else in the supply chain (logistics, refiners, retailers...) is doing the same and just fine they make munnie per bbl or per gallon...
Ive read two articles over the last few months where these people said Australian mining export was down (but the tonnes were up) and Brazilian oil exports were down (and the barrels were up)...
It's a tradeoff between price and quantity. Exporting countries with budgetary goals ensure that the budgetary goal is met.
A budgetary problem only arises when the market does not respond to price cuts by demanding more goods.
The nominal terms are very important which have debt nominated in USD though (like Argentina). thankfully governments have been learning and the external debt is rather low amongst most of them.
Nigeria though... lol, I guess they didn't learn.
http://www.taxresearch.org.uk/Blog/2016/01/11/this-is-beginning-to-look-like-a-downturn/
R Murphy is worried too.
One wag's comment on AEP: "He's predicted 94 of the last 2 recession. I bet he's a nightmare to cross the road with".
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