QUOTE(Havoc Knightmare @ Jan 16 2019, 01:50 PM)
Investors need to distinguish between a recession and a full blown crisis. What global markets are expecting is a recession, as in contracting economic growth. Corporate profits will shrink but business goes on as usual. Central banks and governments will act to stimulate growth by lowering interest rates and spending more, leading to normalisation of growth. Stock markets may dip in line with contracting profits, but nothing major. Several countries like Germany are already at this point, with the economy contracting in Q4 of 2018. If it contracts again this quarter, this qualifies for a recession but markets are not making a big deal over this.
On the other hand, a crisis involves more than just contracting GDP growth. It involves the messy unravelling of the financial system due to loss of faith in the banks and other institutions. This is usually triggered by the bursting of some asset bubbles, and the failing of central banks to act in preventing the domino effect. Everyone just dumps anything except cash and solid bonds. We saw that in the US in 2008 and Asia in 1997. In this scenario a major bear market is likely.
At this point, which is more likely? Are there any significant asset bubbles that will burst? If yes, how will central banks react? Do we expect them to do nothing until banks fail?
So far, stocks are not showing any bubble like valuations. Property prices are high, but central banks are very careful to not cause a collapse. The only bubble that I can think of that has burst is the crypto space, which had little impact on financial systems fortunately.
Since this thread is focused on a crash,
what do you guys think will trigger it? Just an open ended question to think.
Many says China property bubble ( which I heard since 2009 I think ), which will affect the chinese banks etc.
Some says brexit, will trigger something on pound and those european debt crisis . ( I think I heard this since 2010 also ).
some even say japan debt crisis as well ( which mentioned many many years ago also )
Agree with you, the bubble than has been burst recent years only happen in crypto.
I dunno you all, I still bull on global giant tech stocks .
Based on equity market pricing recently, this trade war almost fully absorb in the equity market valuation.
I expect Malaysia equity will continue in bear territory at least another 2 more years. So far no good news I heard at all
most of the analyst estimate earning result of companies like O&G , Construction , Plantation , Casino . Property , etc
not much surprise and going down or flattish in the next few quarter.
Really bottom or not , I guess nobody know. Just slowly add and add lo