Following the slowest GDP growth since WWII, Japan’s continued negative interest rates, and monetary easing across much of Europe, experts say that it is likely impossible that one will see the next market crash ahead.
In an era marked by economic policy focusing almost entirely on monetary easing, experts say that given recent market activity we are not likely to see “greater emphasis on job creation, tax reforms or labor market flexibility,” reports Business Insider.
While the global equity market surged this past month, with the S&P 500 rising by 3.5 percent and the FTSE-100 rising by 3.3 percent, global economic prospects “have deteriorated,” reports Business Insider.
Investors are piling money into equity markets–generally considered higher risk investments–amid the nearly global monetary easing and sluggish economic outlooks in Japan, the US, Europe, and even parts of China.
Experts point to the fact that central banks are not going to be able to burst the next economic bubble “through monetary easing,” reports Business Insider. And as monetary easing is becoming less and less effective, investment experts say that “rising equity prices are no longer supportable even with rising liquidity.”
Komal Sri-Kumar, President of Sri-Kumar Strategies, advises that as valuations keep rising and corporate profits continue to fall “the party will likely come to a sudden end – – much as equity prices crashed in 2000 – 2001, and equities and US house prices plunged in 2008.” He concludes by stating that, as in other market crashes, “don’t expect warning bells to ring to tell you to get out in time!”
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