By Adam Sharp On Tuesday, the Fed announced an emergency 0.5% rate cut. It was a desperate move with a lot at stake.
The risk that we face is a potential drawdown (decrease in stock prices) of 50% or more. These events happen every 10 years or so, and they almost always coincide with the peak of debt bubbles.
And we’re very late in this credit cycle. We’ve piled up a truly incredible amount of debt.
A big drop in stock prices would send consumer spending plummeting. Companies would start having more trouble servicing their huge debt loads. And things could get gnarly for a while.
The …read more
