Thursday, April 14, 2016
IMF: 20% STOCK DROP COMING
The International Monetary Fund is expecting a 20 percent plunge in the markets in the United States, United Kingdom, Eurozone and China over the coming 24 months, according to a report in the Telegraph.
Jose Vinals, the chief of the organization’s financial stability division, said there are several contributing factors, including a huge “loss of market confidence” that would drag down the markets.
The IMF report, addressing global financial stability, said “financial and economic stagnation” looms unless governments find a way to avoid the “pernicious feedback loop of fragile confidence, weaker growth, low inflation and rising debt burdens.”
The Telegraph called it the “bluntest warning to date on the costs of policy inaction,” and outlined how investors can “lose faith in policymakers’ ability to revive the global economy.”
Vinals predicted the resulting slowdown could knock 4 percent from the world’s output, “relative to current expectations over the next five years,” and he noted a $1.3 trillion corporate debt in China poses “potentially serious challenges to financial stability if defaults pushed banks over the edge.”
Under the scenario he sees possible, Vinals said stocks in the U.K., U.S., Eurozone and China all would lose “a fifth of their value over two years.”
But IMF report did offer some stark warnings, estimating that more than 15 percent of commercial bank loans to companies in China were “at risk.” Those companies already are taking 72 days to pay suppliers, up from 53 days just four years earlier.
Read more at http://www.wnd.com/2016/04/imf-20-stock-drop-coming/#ivLxfu57DBwifMvA.99