RBA's weather warning
The sun was shining on the markets this week. But should they be preparing for the possibility of floods?
Investors have spent the week basking in the warmth of an exuberant market, buoyed by expectations major international economies are going to achieve a soft economic landing.
The S&P 500, NASDAQ and the Dow Jones Industrial Average all hit record highs, while the ASX 200 today closed 76 points off its record set earlier this month.
But the RBA's latest Financial Stability Review released on Friday offered a timely rejoinder and articulated what some in the market are thinking: the risks right now are skewed to the downside and there’s every chance that investors are putting on sunglasses when they should be pulling out their umbrellas.
“Current pricing in financial markets appears to be predicated on market expectations of a soft landing in the global economy, and therefore remains vulnerable to negative surprises,” the latest missive from Martin Place warns. In recent weeks, everyone from JPMorgan CEO Jamie Dimon to private equity firm Apollo's chief economist have cast doubt over a soft landing in the global economy.
