RBS ( The Royal Bank of Scotland ) tells investors: 'Sell everything'
The Royal Bank of Scotland (RBS) has advised clients to brace for a "cataclysmic year" and a global deflationary crisis, warning that the major stock markets could fall by a fifth and oil may reach $US16 a barrel.
The bank's credit team said markets are flashing the same stress alerts as they did 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.
RBS has tipped Wall Street stocks to fall by as much as 20 per cent. Photo: AP
RBS's credit team said markets are flashing the same stress alerts as they did before the Lehman crisis in 2008. Photo: The age
Andrew Roberts, the bank's credit chief, said both global trade and loans are contracting, a nasty cocktail for corporate balance sheets and equity earnings, and uncharted waters given that 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 'Goldilocks' love-in of the last two years," he said.
Mr Roberts expects Wall Street and European stocks to fall by 10pc to 20pc, with an even deeper slide for the FTSE-100 thanks to its high weighting of energy and commodities.
"London is vulnerable to a negative shock. All these people who are 'long' oil and mining companies thinking the dividends are safe are going to discover that they're not at all safe," he said.
Brent oil prices will continue to slide after breaking through a key technical level at $US34.40, with a "bear flag" and "Fibonacci" signals pointing to a floor of $US16.
The bank said a paralysed Opec seems incapable of responding to a deepening slowdown in Asia, the swing region for global oil demand.
as per this website ( is this true ? )
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Posted by: Ravi Narasimhan <ravi.narasimhan.in@gmail.com>
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