Fund Managers Say This is The Biggest Market Risk

No, it’s not a bank panic. It’s what comes after…

Between Mar. 10-16, Bank of America asked 212 fund managers what they thought was the biggest market risk (BBG). The results:

• 31% say a credit crunch is the biggest market threat.
• 25% say inflation is the biggest threat.

A credit crunch is a scenario where loans become more expensive and harder to get.

Why that’s bad: “Credit is the mother’s milk of economic activity” — per Moody’s Analytics Chief Economist (CNBC). MM — the heart of the boys and the economy.

Businesses rely on credit to grow, and consumers need it to finance big purchases (i.e., homes and cars).

• The recent events in the banking sector could lead to a credit crunch — which would slow the economy.
• Banks will likely slow the pace of lending and prioritize strengthening their cash balances.

“The economy is heading for recession and the credit crunch has accelerated the pace,” — per the Chief Economist of TS Lombard (MW).