The market is bracing for a global recession

Friday, January 22, 2016
By Paul Martin

Myles Udland
BusinessInsider.com
Jan. 22, 2015

inancial markets seem to be bracing for a global recession.

According to analysts at Citi, financial markets are moving toward pricing in a global growth recession even as economic data indicates such a recession is by no means inevitable.

The caveat is that Citi defines a global growth recession as global gross-domestic-product growth of less than 2%. The International Monetary Fund, for its part, expects global GDP to grow by 3.4% this year.

“A global growth recession is far from assured but financial markets seem to be on their way to pricing one in,” Citi wrote on Thursday.

“Financial conditions tighten as this process unfolds, thus increasing the probability of the outcome that investors and speculators were afraid of in the first place. Judging by anecdotal comments from recent client meetings, our sense is that real money investors, rather than panicked speculators, are increasingly participating in this de-risking.”

The key takeaway here is that Citi isn’t citing commentary from people on CNBC or in The Wall Street Journal but rather from big-money clients who can’t exactly be nimble in shifting around their portfolios.

When a firm like Citi talks about a “real money investor,” it is talking about someone overseeing upward of a billion dollars on behalf of numerous investors.

The Rest…HERE

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