The Royal Bank of Scotland has warned clients to “sell everything,” anticipating a “cataclysmic year” for markets.
“Sell everything except high quality bonds,” the bank’s credit chief, Andrew Roberts, said in a note to clients this week. “This is about return of capital, not return on capital. In a crowded hall, exit doors are small.”
The note said the current situation was reminiscent of the 2008 collapse of Lehman Brothers, which led to the global financial crisis. This time China could be the crisis point, The Guardian reported.
“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,” Mr. Roberts said.
He said European and U.S. markets could fall by 10 to 20 percent.
Analysts at JP Morgan have also advised clients to sell stocks on any bounce, and Standard Chartered has predicted a slide in oil prices to as low as $10, The Guardian reported.
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“Given that no fundamental relationship is currently driving the oil market towards any equilibrium, prices are being moved almost entirely by financial flows caused by fluctuations in other asset prices, including the U.S. dollar and equity markets,” Standard said. “We think prices could fall as low as $10 a barrel before most of the money managers in the market conceded that matters had gone too far.”
• Jessica Chasmar can be reached at jchasmar@washingtontimes.com.
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