Global Financial Risk: “Like in August 2007”
This “will continue to increase in value relative to declining asset prices”
by Bob Stokes
Updated: October 06, 2022
The threat of a "financial Armageddon." "Subprime mortgage meltdown."
Those were a couple of the memorable phrases from the 2007-2009 financial crisis.
Now, a former high-ranking U.S. government official harkens back to the weeks leading up to those scary days and likens them to what's going on today.
A Sept. 29 Bloomberg headline said:
Global Market Risk Is Building Like in August 2007, [Former U.S. Treasury Secretary Larry] Summers Says
Let's go back to that time about 15 years ago. Here's what our September 2007 Global Market Perspective (which published August 31 of that year) told subscribers:
Dramatic economic and social events [will include] an unprecedented credit crisis.
A little more than a month later, the Dow Industrials topped and the Great Recession followed. Of course, that financial crisis turned out to be the most severe since the Great Depression of the early 1930s.
Fast forward to our just-published October 2022 Global Market Perspective, which says another financial crisis is likely just ahead. An explanation is provided with this chart and commentary:
The bond market is again signaling major financial calamity ahead. The chart is the ICE BofA Move Index, the bond market's equivalent of the VIX for stocks. On [Sept. 28], the Move index surged to close at 158.99, its highest level since the Covid market meltdown from January to March 2020... Each time the Move index has surged to current levels or higher, a major financial or economic crisis was occurring. So far, the latest surge has coincided with no real financial trouble, as asset price declines have been very orderly. This relative calm will change.
Just how big of a "change" is anticipated?
Put it this way: now is the time to focus on wealth preservation. As the new Global Market Perspective also notes:
Cash is edging back into vogue and will continue to increase in value relative to declining asset prices.
Get more financial insights from our just-published October Global Market Perspective by following the link below.
The Only Permanent Thing in Global Financial Markets is...
...change.
The irony is, too many investors make financial decisions based on current trends.
That's why so many are surprised and unprepared when the inevitable change happens.
The very first chart in our just-published October Global Market Perspective is titled "The New World Order" -- which, of course, implies major change.
Get the details in our professional-grade Global Market Perspective -- PLUS, gain access to our special report "Preparing for Difficult Times" -- via a special offer.
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