Fund Managers Say This is The Biggest Market Risk – The Average Joe

    Fund Managers Say This is The Biggest Market Risk

    Victor Lei — Head of Research

    March 21, 2023

    March 21, 2023

    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).

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