If you read the headlines of the leading financial publications on a regular basis, you will know that most investors seem to be afraid of the current market environment. Headlines such as
"Forget the stock rally, investors are holding cash",
"Credit Suisse: Clients Say They Are “Lost”, "Sentiment At Record Low" and
"Investors Continue To Sell Stocks Missing Massive S&P 500 Rally" are commonplace. Sentiment seems to suggest that most retail and institutional investors are afraid that a sudden market downturn could be just around the corner.
Only time will tell what catalyst will spark the next major market decline, although analysts at
Natixis believe they have narrowed it down to three key risks that could be the undoing of this bull market — the second longest ever.
What shocks could have a major impact on financial markets?
Natixis is looking for the shocks that have a non-null probability of occurring. In other words, these are shocks that are not currently expected by financial markets if they materialise they are likely to spark a strong reaction by traders and investors.
A transformation of the current economic slowdown in the US into a real recession is one such event. For the optimists, it’s unlikely this slowdown will occur in the near-term. After a lacklustre second quarter GDP reading of 1.2% vs. the 2.6% expected, the US economy is on track to grow at a 3.6% annualised rate in the third quarter according to the Atlanta Federal Reserve’s GDP Now forecast model. On the other hand, there are those that say the second quarter GDP reading of 1.2% indicates that the US economy is ending the late cycle stage growth will only slow from here on out. The third quarter GDP reading is key to settling this argument.
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Dynamic Wealth Research was founded on the principle the world is changing at an ever-increasing pace. The greatest profit opportunities an investor will ever find are from massive, sweeping changes. Dynamic Wealth Research analyzes and closely follows these changes, keeps its readers on the leading edge of them, and shows you how to be best positioned these anxious, interesting, and ultimately profitable times.
