LET ME COUNT THE WAYS

 

The United States is mired in an astonishing economic complacency.  Probably because there is an entire generation of investor that only thinks the market can move in one direction: UP.

After all we have the FED ready and able to bail out any and all problems by buying up an and all risk assets to keep the prices from ever falling.

Even now as the FED promises to tighten to fight inflation the markets keep going up.  What could go wrong?

Well, Let's count the ways:

A) Russia, keeps up it's aggressive ways until the world is sucked into World War Three.

B) The Russian banking system fails under the stress of sanctions.  The fallout spreads through the world wide banking system forcing a massive multi trillion dollar bailout.

C) The Fed's rosy 2.8 GDP projection turns out to be no more accurate than most of their predictions and their current tightening tips the US economy tips into recession, forcing the Fed to ease in the midst of massive inflation.

D) Inflation keeps rising as Food and Oil and base metal prices remain elevated for the foreseeable future pushing the broad middle class towards bankruptcy, and creating worlwide famines.

E) US Politicians continue their bitter partisan divide until the next election cycle is contested, derided as corrupt, and the country loses faith in its own democracy.

F) High oil prices prompts a new round of fracking and drilling which causes to the climate to further deteriorate manisfesting in increased fires, floods and other natural disasters which decimate entire populations.

G) As inflation tips worldwide trend growth below 1 percent, the quadrillion dollar debt derrivatives market discovers a massive amount of mispriced debt creating a massive liquidity crisis.

Are any of these scenarios likely?  Yes,  They're all quite possible if not likely, but the chance of one of them coming true is all but certain.  If only one comes true we are looking at economic difficulties that are not at all reflected by current asset prices.

If a few of these come true we'll be looking at a repricing of assets that is quite literally off the charts.

Happy investing.