Factors that Could Trigger a Market Crash

Factors that Could Trigger a Market Crash

It seems like we’re enjoying the bull market that will never end, but rest assured, they all do.

One hopes that when this ride comes to its end, we’ll see a fairly calm reversion to the mean. A market crash is a sudden collapse that could be caused by some sort of disastrous political or economic event – like the subprime debacle of 2008.  One hopes there are no such debacles headed our way, but here are a few things that could cause some trouble.

An over enthusiastic Fed – the Fed has already raised rates several times and the hikes are expected to continue. Economic growth and inflation are doing fine, but if the Fed oversteps there could be problems.

Trade wars – with the president’s enthusiasm for tariffs on China and other trading partners, we could see damaging retaliatory actions. Things are under control so far, but a full-blown trade war could push the market into a meltdown.

International debt – Turkey is mired in crisis with the dollar strengthening, the Turks are going to have more trouble paying the piper. Greece, Italy and Spain have debt trouble as well. An international debt debacle could take the stock market down in short order.

A new subprime crisis – this time in auto loans – last year Equifax reported that auto loans to borrowers with poor credit scores have reached higher delinquency rates than what we saw in 2007. These borrowers, with few options to finance their cars, have to suck up high rates. If the job market takes a downward turn, these borrowers are going to be defaulting. Like mortgages, auto loans are securitized. If borrowers default, you know what happens.

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The last 3 are:

There’s a replay of the 2008 banking crisis
A slowdown in economic growth
The political divide becomes too great to overcome

For more information, please read:
7 Things That Could Trigger a Stock Market Crash | US News

 

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