Sunday, May 8, 2016

The bad case scenario

Earnings decline.
Investors accept that truth and PEs decline. I.E. stocks go down.
Bond spreads go way wide.
This causes the recession to go deep enough to be believed.
Massive deficit spending begins.
QE4 is initiated.
It fails as rates go deeply negative.
Then we get helicopter money.
Currency and Trade wars become intense.

I adapted this from Soc Gen’s perennial bear Albert Edwards.

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