RBS has advised clients to brace for a “cataclysmic year” and a global deflationary crisis, warning that major stock markets could fall by a fifth and oil may plummet to $16 a barrel.I called this but got shouted down. Many said I was wearing a tinfoil hat. But now? Now this is taking on the same "look" of the 2007 crisis. At first they talked up the economy and said there was no problem.
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 research chief for European economics and rates, 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.
“China has set off a major correction and it is going to snowball. Equities and credit have become very dangerous, and we have hardly even begun to retrace the 'Goldlocks love-in' of the last two years,” he said.
Then we heard quiet whispers that everything was melting down....and finally we got full throated screams that the economy was in trouble but it was too late for the masses to get out of the way of the trainwreck.
Its happening again.
Full disclosure. I am trying to take advantage of the chaos and bought a few positions in oil....my thoughts are long term and that once this all unravels, gets sorted out and a real economy put into place to replace it, that we're going to see the average price of a barrel of oil sky rocket (the potential fly in my ointment is the Chevy Bolt....man! that vehicle looks like the electric car we've been waiting for).
Regardless, this is the first of many warning you'll get before it all goes sideways. Act decisively to protect yourself!