Tags: david rosenberg | credit | market | bubble | bull | stocks

David Rosenberg: Credit-Market Bubble Will Halt Raging Stock Bull

(Dollar Photo Club)

By    |   Tuesday, 24 July 2018 05:34 PM

Investment guru David Rosenberg warns that a credit-market bubble will also halt the seemingly endless bull-run in the stock market.

The Gluskin Sheff chief economist and strategist warned savvy investors to beware of widening spreads.

"The corporate bond market is today’s bubble, just like the mortgage market a decade ago was the bubble back then," he recently told CNBC.

“Something tells me in the next six months that we’re going to have a dramatic widening in credit spreads," said Rosenberg. "I know what happens in the tail end of every Fed tightening cycle," he said.

A credit spread is the difference in yield between a corporate bond and its Treasury equivalent. If they are widening, bond investors believe corporate balance sheets are getting riskier and want more in return for that risk compared with a government bond, CNBC explained.

Rosenberg isn't alone in his warnings about a market crash.

Stock markets on both sides of the Atlantic are in for a rough ride if trade tariffs keep rising, Handelsblatt Global reported. 

Analysts at UBS said US and European stock markets stand to lose at least 20 percent in a trade war, bringing the stock boom that has lasted for over 9 years to an abrupt halt. 

“A trade war would be a worst-case scenario, especially for stock markets on both sides of the Atlantic,” said the chief economist of German bank IKB, Klaus Bauknecht.

(Newsmax wire services contributed to this report).

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Investment guru David Rosenberg warns that a credit-market bubble will also halt the seemingly endless bull-run in the stock market.
david rosenberg, credit, market, bubble, bull, stocks
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2018-34-24
Tuesday, 24 July 2018 05:34 PM
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