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A PERFECT market storm is brewing and it’s going to leave economic carnage in its wake, a finance expert has warned.
Investors should prepare for world stock markets to sink by a massive 12 per cent amid a repeat of the turmoil that tore through stock markets at the beginning of the year, according to David Rosenberg chief economist and strategist at wealth management firm Gluskin Sheff.
He believes markets are not ready for a US interest rate rise and when the US Federal Reserve does make changes to its policy – which could happen as early as next week – there’s going to be a nasty shock.
The economist told CNBC: “You have a perfect storm here if you get something like a Fed rate hike into the next several month.”
He said: “The problem is that the market is not priced for it. I wouldn’t be surprised that we see some kind of repeat as we had towards the end of last year into January-February, which was something close to a 12 percent correction.”
“The problem now, looking at where the market is priced, you’ve got cycle high multiples, you’ve got a lot of hedge funds in the futures options market that have been chasing performance here up to the price highs, and it doesn’t take much in the way of any sort of near-term adverse news to cause the market to correct.”
In a similar vein to the Brexit vote, said Mr Rosenberg believes a Donald Trump win could initially shock the market but in the long term would be “pretty good for the US economy”.
Full article: Prepare for ‘PERFECT STORM’ that will obliterate stocks: Economist’s terrifying warning (Express)