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Tags: Credit Suisse | panic | investors | markets

Credit Suisse: The Markets Are Gripped by 'Panic'

Credit Suisse: The Markets Are Gripped by 'Panic'
(Dollar Photo Club)

By    |   Friday, 02 October 2015 08:29 AM EDT

The recent global stock-market volatility is easy to categorize: it’s a full-blown "panic,” Business Insider quotes Credit Suisse as saying.

The recent “doomsday signals” have been recent and plentiful: “China's stock market rout, commodities getting crushed, and a loss of investor confidence at Glencore and Volkswagen have combined for the worst quarter since 2011,” the BI report said.

Global risk appetite dropped to “panic” levels for the first time since January 2012, according to Credit Suisse’s Global Risk Appetite Index, MarketWatch reported.

A team of Credit Suisse analysts, led by James Sweeney, studied global growth rates, economic policies, and asset valuation to deliver the "panic" diagnosis.

“Global growth is not a strong supportive factor for risky assets right now,” said the analyst team led by Sweeney, the bank’s chief economist.

“Weak Chinese growth has had very negative effects on general emerging market performance and commodity prices. And a strong dollar has caused many exporters around the world to see declining trade revenues, even if actual activity has not fallen off a cliff,” they added.

The Credit Suisse analysts said panic usually is an overreaction to short-term events, providing a chance to buy risky assets at a cheaper price.

But MarketWatch cautions that investors should only use this as a short-term opportunity, rather than long-term investment-strategy planning.

“If panic persists, it could alter the global growth outlook for the worse. Ongoing panic and weak global growth would likely influence Fed behavior. But history suggests rebounds often occur when they are least expected,” the Credit Suisse report said.

“That’s why we see the current panic as a tactical opportunity, even if it does not point to a lasting boom in risky assets.”

Credit Suisse’s warning is just another in a long line from prominent financial voices in recent days.

Earlier this week, billionaire financier and activist Carl Icahn warns that the financial markets are on a brink of yet another catastrophe.

In a video on Icahn's website, called “Danger Ahead,” he warns that gridlock in Washington, Federal Reserve monetary policy and irresponsible CEOs are creating a recipe for trouble.

"I've been worried for the last five, six months about the market and the economy and the dangerous spot that we're in," Icahn said.

"I did speak four or five times warning about the problems we have. I want to speak out now because — I know this may sound corny, I grew in the streets of Queens — I love this country and I feel strongly about the dysfunction going on in both Washington and the boardrooms of corporate America," he said.

He told CNBC that low interest rates caused bubbles in art, real estate and high-yield bonds – with potentially dramatic consequences.

Icahn says that financial markets look "way overpriced" and some investors painted themselves into in "dangerous" corners. "I think earnings are misstated and sort of a complete mirage," he said.

"The public in my opinion is going to get really hurt," he told CNBC. "This market is in very dangerous territory," he said.

Icahn has constantly warned about potential problems caused by tax loopholes, stock buybacks and liquidity in the high-yield bond market. Amid his concerns, Icahn said he has hedged his investments much more.

(Newsmax Wires contributed to this report).

© 2022 Newsmax Finance. All rights reserved.


StreetTalk
The recent global stock-market volatility is easy to categorize: it’s a “full-blown panic,” Business Insider quotes Credit Suisse as saying. But the panic creates short-term buying opportunities, analysts say.
Credit Suisse, panic, investors, markets
541
2015-29-02
Friday, 02 October 2015 08:29 AM
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