RBS, aka the Royal Bank of Scotland, is advising its clients to "sell everything" in anticipation of a cataclysmic 2016 leading to a global deflation crisis.
According to The Telegraph
, the bank this week said major stocks could tumble by a fifth while oil could fall to $16 a barrel. RBS's credit team told the newspaper that the markets are showing stress alerts similar to the months before the 2008 collapse of the Lehman Brothers investment bank.
"Sell everything except high quality bonds," RBS said in a client note, according to The Telegraph. "This is about return of capital, not return on capital. In a crowded hall, exit doors are small."
The bank charged that the Brent oil prices will continue to fall and could hit the $16 per barrel mark. Those prices have not been seen since after the East Asia crisis in 1999.
reported that Brent crude fell this week to $31.18, its lowest point since April 2004. Oil prices could continue downward because of concerns of low demand and a supply glut with the anticipation of Iran exporting oil again when sanctions are lifted.
RBS advised that many eyes will be on China, which it believed sustained a huge outflow of capital last month, according to CNN Money
"The plummeting oil price has impacted heavily on activity," Deirdre Michie of the industry lobby group Oil & Gas UK told the Daily Mail
. "Companies are having to take very difficult decisions in what continues to be a challenging time."
Andrew Roberts, RBS's research chief for European economics and rates, said the world is in a global recession. Because of that and falling oil prices, Roberts said investors should be contemplating about getting a "return of capital, not return on capital," noted CNN Money.
The Daily Mail said Barclays, Bank of America Merrill Lynch and Societe Generale all cut their 2016 oil forecasts this week and Standard Chartered said that oil prices could fall as far as $10 a barrel.
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