These Four Stocks Could Start A Market Crash
Run for the hills..? Nope.
How much more horrible does this need to get: Chinese Police Troops poised on the Hong Kong Border? Bond Yields inverted and tumbling lower? Germany sliding into recession? China hiding internal pain? Global Equity threatening to puke completely? Italy government about to fall? Brexit? Trade wars deepening? Political gridlock? Geopolitical uncertainty? A new banking crisis? The outlook looks horrible… but Relax. Just Do It! The sun will likely come up tomorrow. And don’t forget we are right in the Ides of August: the thinnest, most illiquid time of the year. Crashes usually happen in October!
We’ve also got a growing awareness from global regulators, central bankers, and politicians of just how badly flawed policy responses and their unintended consequences have been since 2008. None of them want to jeopardize their electoral chances or future careers. If crisis crunches into crash there is the reality of a rescue bailout to factor in. (How is the question – central banks are out of options on rates, so I guess they just buy everything and end the logic of free markets for ever…)
Plus, it’s a simple fact there is loads and loads of ready cash sitting waiting for the opportunity to invest on a market reset. When the whole street is waiting for a correction as the moment to buy... It doesn’t happen till you don’t expect it.
Let’s not be overly optimistic. There are clearly troubles ahead, but I suspect they are likely to be tactical in the short-run. The risk is a couple of tactical shocks could precipitate a strategic collapse. Let me explain – all it might take is a couple of key stock shocks to really crush market sentiment, and spin us into a situation where the “authorities” have to respond to crisis.
Let me give you the four stocks I think you should be watching for signs we’ve in the deep solids…
I am sure there are a host of other equity and bond stories that could provide the sparks that light a market conflaguration in coming weeks. Or maybe we will get lucky and the fires keep get put out before they take hold. We only need to be unlucky a few times….
Bottom line – I suspect we are at something of a wake-up and smell the coffee moment. It’s going to be painful and massive pressure on top level level stocks will trigger all kinds of post-shock consequences. It will likely trigger a regulatory reaction and a buying opportunity. I suppose the only strategy is stay awake and be a boy-scout: be prepared..
Meanwhile, back in Camelot… Blain’s Brexit Watch
When I get round to writing the definitive comedy about Brexit I am going to ask Jeremy Corbyn to play himself. He’s brilliant. An unchallenged masterof pathos, gormlessness, and a capacity for self-delusion that would be unbeatable if parliament didn’t already contain Hammond and the Liberals. However, his offer to lead the country might not be so stupid – he’s not saving No-Brexit. He’s strectching out the pain, promising Brexit Tomorrow, if you still want it. Bottom line on Brexit. Going to hurt. UK will feel pain, and recover. Not so sure about Europe.
Bill is a well known broadcaster and commentator, with over 30-years experience working for leading investment banks and brokerages at senior levels. He's been closely involved in the growth and development of the global fixed income markets, and pioneered complex financial products including capital, asset-backed securities and private placements. Increasingly, he's been involved in Real and Alternative Assets looking to explain their complexity and create liquidity in them.
Bill is a passionate sailor, talentless painter, plays guitar badly, is learning the bagpipes, and built a train-set in his attic.
He is a regular speaker on HoweStreet.com, and the FinancialSurvivorNetwork radio shows. Chris was also featured on the cover of AmalgaTrader Magazine, and contributes articles to several financial hubs like MoneyShow.com.
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