Markets could drop as much as 20% if risk-taking investors pull back, says Bank of England

MarketsInsider/Ethan Wu (Reuters)

Repost from 10-12-2021

graphic representation of a tsunami

“‘Asset valuations could correct sharply if, for example, market participants re‐evaluate the prospects for growth, inflation or interest rates,’ the Bank of England said in a statement. ‘Any such correction could be amplified by vulnerabilities in market‐based finance that were exposed in March 2020.'”

USAGOLD note:  The trickle of articles on inflation graduating from “transitory” to “persistent” has turned to a river. The tide of opinion has suddenly turned. Though the central banks are sticking to the transitory narrative, the market players are beginning to register their doubts. The vulnerabilities the Bank of England mentions will be exacerbated by the excessive leverage at play and programmed trading. That is why Leon Cooperman recently warned that “when the market goes down, it’ll move so fast your head will spin. It’s all algorithms.”

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