These Are The 30 Biggest Risks Facing Markets in 2018
The comments above & below is an edited and abridged synopsis of an article by Tyler Durden
Once, Wall Street analysts had just two things to worry about: interest rate risk and corporate profits. Virtually everything else was derived from these. Now central banks step in every time there is a hint of a market correction, so no one knows what is and what isn’t priced into the market any more, simply because the market (in the conventional sense of a future discounting mechanism) no longer exists.
So even as the VIX slides to record lows, the number of things to worry about grows. There are no less than 30 risks investors should be aware of in the coming year, including a US equity correction, a reversal of Brexit, Irish presidential elections, a Bitcoin crash, rising inflation and danger from North Korea.
The risks should be thought of not only as potential VIX boosters but also as potential sources of faster or slower growth.
The biggest worry is a spike in inflation. Low unemployment, growth projections for GDP and other financial measures signal a potential rise. Banks are warning that their optimistic forecasts are null and void if inflation spikes in the coming months, forcing the Fed to tighten US monetary conditions at a faster pace.
On the geopolitical front, US uncertainty about North Korea’s test launches of missiles capable of reaching the US mainland and other potential targets could roil financial markets.
Other risks include a Bank of Japan leadership change, the ECB announcing its QE exit, housing bubble bursts in Canada, Australia, Sweden and Norway, a correction in the US stock market, and a harder landing than expected for China as economic growth there slows.