The financial markets have been flashing Doomsday signals in the past few months.
China’s stock market rout, commodities getting crushed and a loss of investor confidence at Glencore and Volkswagen have combined for the worst quarter since 2011.
A team of Credit Suisse analysts led by James Sweeney looked at investor appetite for risk and found that at the moment it fits the profile of a full blown panic.
They looked ran the numbers indicators such as global growth rates, economic policies and asset valuation to come to that conclusion.
So if it feels like we’re living through something similar to the Euro sovereign debt crisis of 2011, or the fall of Long Term Capital Management in 1998, it’s because we are.
The Credit Suisse chart shows where we are today, compared to past panics:
This can be very good news for investors who have the stomach for some risk, for a short time at least. Where there is panic, euphoria can’t be very far away.
Here’s Credit Suisse (emphasis ours):
In our view, the current risk appetite panic suggests a short-term opportunity to buy risky assets. However, we do not think this panic represents a longer-term opportunity to add significantly to risk exposure because growth, valuation, and policy indicators are not currently strongly supportive for risk taking, as has often occurred in past panics.