The BIS is warning the financial system is prone to repeat episodes of volatility like the one that rippled across markets in August when a popular hedge fund strategy collapsed.
“We should be under no illusion. This is not the first and will not be the last turbulence in markets,” said Claudio Borio, head of the monetary and economics department at the BIS, in a press conference. “It is part of the bigger picture, the inevitable withdrawal symptoms that markets suffer as they transition away from the extraordinary period of exceptionally low interest rates and ample liquidity.”
finance.yahoo.com/news/markets-risk-similar-volatility-carry-110001166.html
“The signs of bubbles emerging in financial markets are clear to see. The Dow Jones Industrial Average recently surpassed 40,000 for the first time, and the UK FTSE 100
both have reached new highs. Forward price-to-earnings ratios in the United States recently traded at a multiple of around 25 — well above the historical average of 16 — and these high valuations have persisted despite interest rates above 5%.
Such trends certainly justify worries about new stock-market bubbles. But not all bubbles are equal, and only some are problematic for the wider economy. As we saw after 2007, what matters is whether a burst bubble will trigger a chain reaction that undercuts growth for years.”
A recession is coming in the U.S., and ‘a few rate cuts’ won’t prevent it, says strategist
“Contrary to what many believe, investment research firm BCA Research sees that the economy is on the cusp of a recession, and the predicted upcoming U.S. Federal Reserve rate cuts will not be sufficient to steer markets out of it.
“Every single one of us now believes there’s a recession, and that’s exactly the opposite of what the market believes,” Garry Evans, BCA Research’s chief strategist of global asset allocation told CNBC’s “Squawk Box Asia.”
Evans pointed to signs of the economy slowing down, including what he called the “deteriorating” U.S. labor market. The U.S. Labor Department reported that the unemployment rate inched to 4.3% in July to its highest since October 2021, and a gauge for U.S. manufacturing activity fell to an eight-month low in the same month.
“There’s things that are breaking down quite rapidly now,” said the strategist.”
www.cnbc.com/2024/08/23/us-recession-is-coming-and-a-few-rate-cuts-wont-prevent-it-strategist.html
h/t mark000
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