This isn’t some dire warning from “another one of those blogs” where the writer/blogger is publishing clickbait.
No, the latest warning of an impending financial apocalypse has come from none other than the Royal Bank of Scotland, only the world’s 20th biggest bank. So you have to take that as some sort of validation that maybe all of the predictions that the world is living on borrowed – literally – time have at least some truth to them.
As noted by The Economic Collapse Blog by site creator Michael Snyder, such a warning is typically something he posts, based on his own thinking and observations. But the fact that this latest warning to “sell everything” came from the RBS and not just from him or another global financial observer is crucially important.
“The Royal Bank of Scotland is telling clients that 2016 is going to be a ‘cataclysmic year’ and that they should ‘sell everything,’” he wrote. “This sounds like something that you might hear from The Economic Collapse Blog, but up until just recently you would have never expected to get this kind of message from one of the twenty largest banks on the entire planet.
“Unfortunately,” he continued, “this is just another indication that a major global financial crisis has begun and that we are now entering a bear market. The collective market value of companies listed on the S&P 500 has dropped by about a trillion dollars since the start of 2016, and panic is spreading like wildfire all over the globe. And of course when the Royal Bank of Scotland comes out and openly says that “investors should be afraid” that certainly is not going to help matters.”
Oil is tanking the markets
As reported by The Telegraph, the RBS credit team sees signs of the global financial collapse of 2008 and are now transmitting the same alerts as they did prior to the collapse of Lehman Bros.
“Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small,” the bank warned.
Globally, the financial waters are receding and the signs are not good, according to Andrew Roberts, the bank’s credit chief. He said that global trade and loans are contracting, which when combined will not bode well for corporate balance sheets and equity earnings. He also noted the world may be entering uncharted waters after debt ratios have climbed to record highs.
“China has set off a major correction and it is going to snowball. Equities and credit have become very dangerous, and we have hardly even begun to retrace the ‘Goldilocks’ love-in of the last two years,” he said.
Since the beginning of the year stocks on Wall Street have declined by the high single digits. Led mostly by a collapse in oil prices (though they rose briefly last week), global markets have taken a beating and, as RBS is estimating, they aren’t out of the woods yet. In fact, the bank is betting that a confluence of global events will eventually drive oil down to $16 a barrel, a price not seen since 1998.
China is the main culprit
As further noted by the Telegraph:
Roberts expects Wall Street and European stocks to fall by 10 per cent to 20 per cent, with an even deeper slide for the FTSE-100 thanks to its high weighting of energy and commodities.
“London is vulnerable to a negative shock. All these people who are ‘long’ oil and mining companies thinking the dividends are safe are going to discover that they’re not at all safe,” he said.
Brent oil prices will continue to slide after breaking through a key technical level at US$34.40, with a “bear flag” and “Fibonacci” signals pointing to a floor of US$16.
China is driving the devaluation and the flight of capital from the company following years of debt-driven infrastructure expansion that has now reached a point of saturation.