Top economist warns markets could drop 10 per cent in plunge which could wipe off MILLIONS
A TOP economist has warned that markets could see a dramatic drop of 10 per cent that could wipe millions of pounds from economies.
By VICKIIE OLIPHANT
Express.co.uk
Fri, Mar 25, 2016
Mohamed El-Erian told CNBC that the current ‘range-bound’ market could soon see a dramatic swing as it tries to climb upwards, with a potential “overshoot” threatening to plunge stocks downwards by 10 per cent.
The Allianz chief economic advisor said the markets could get “excited” about corporate cash being pumped into markets.
But these threaten to expand the range of the market, and a reverse movement is then needed to adjust for the overvaluation.
He also said traders should not be surprised to see a five to 10 per cent move in the opposite direction, adding a market dip is not certain.
His comments come as US stock markets dropped yesterday with the major averages falling by 0.3 per cent each.
Oil prices have also dipped.
Historical trends since 2009 suggest that on average the market falls in the one week and one month out periods.
But past trends also show that the market will correct itself quickly.
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