Wednesday, 2 September 2015

Warning Signs That The Stock Market Might Crash In 2015

Posted at  07:15  |  in  Stock Market

Stock Market News
As the US stock markets are trading near their record high levels, it is not at all a huge surprise to believe that most economists, analysts and investors are predicting a bullish stock market. In fact , a possible stock market crash in 2015 is perhaps the last thing that you should hear this year. And why would the stock market crash? After all, the stock market is seen to move steadily higher since 2009.

The NYSE or the New York Stock Exchange has gone up by 165% and the NASDAQ is up 275%. Nevertheless, despite the positive stock market news, here are some warning signs that still say that the stock market may crash in 2015.

  • Repeated injections of quantitative easing:

  • It has been 5 years now that the investors have been fearing about the risk of being drugged into madness due to the repititive injections of quantitative easing. Price and risk have become estranged due to the lack of fear. As the credit situation is tough in China and the US, the law of unintentional effects will hold on in 2015 as more and more investors wake up. This could lead to a possible stock market crash this year.
  • Rise in the US Treasury yields:

  • As the Federal Reserve took the decision of raising the interest rates the first time almost a decade ago but the latest third quantitative ease buying programme just ended in the month of October, 2014. This is why credit markets are now expecting a poor market and also a poor year for the US Treasuries.
  • Increased US credit risk:

  • The wider credit market is even flashing some warning signs which imply that there could be a crash in 2015. The TED spread is the difference between the rate at which the US banks are eager to lend to each other and the rate at which the Federal Reserve lends. In the general economy, the TED spread is being considered as the credit risk and this has increased since December, 2014.
  • Interest rate shock:

  • The interest rates have been at their emergency low levels in the US and the UK for the last 5 years. The United States has been seen to move first with the rates moving upwards and reaching a high level by the middle of the year. 
Therefore, if you still can’t believe the stock market news that the stock market is in for a crash in 2015, you can take into account the above mentioned warning signals.

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Jimmy Simond is founder of he share his immense knowledge of finance in this blog. You can follow him on Google+.


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