Since I already provided 5 reasons to remain cyclically bullish I figured I’d offer the other side of the coin as well. Here’s 6 downside risks via Deutsche Bank:
1. US – failure to raise debt ceiling: political deadlock, government shutdown, weak confidence hurts growth.
2. Europe – political breakdown raises tensions: e.g., antireform government in Italy, political unrest in Greece, antieuro sentiment in core countries amid recession.
3. Global growth weakens on spill over from a shock in one economic region: e.g., EM lags amid failure to reform, Europe fails to return to growth, slowdown in the US.
4. Disorderly sell-off in core rates: concern over excess money printing leads to a bond and risk asset sell-off .
5. China – non-performing loans: rising NPL’s on bank balance sheets constrain credit availability and growth.
6. Middle East tensions escalate and push up oil prices.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
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