Monday, 10 October 2016

US recession risk down but market vulnerable to one

The Federal Reserve has calculated that the US economy has a 12 percent chance of entering a recession in the next 12 months.

That is down from 16 percent in August and the lowest number since 10 percent in February 2015.

However, Bank of America-Merrill Lynch's head of US equity and quantitative strategy Savita Subramanian warned that “we're going to hit a recession sometime in the second half of next year”.

“We are seven years into a full-fledged, all out, central bankers doing everything they can to stimulate demand,” she said. This has made the market fragile. “There are a lot of itchy trigger fingers. There's lot of violent trades that can really roil a fairly complacent environment.”

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