UBS: We are witnessing the end of the credit cycle and a crash is coming
Business Insider
The risk of a stock market crash is growing, according to UBS. The era of cheap debt and plentiful liquidity is slowly drawing to an end, according to a team of UBS analysts, led by Paul Winter, making it harder to use credit to juice corporate profits. As earnings fall, so will investors' confidence in stocks, leading to either a market crash or a correction, which is a slower and less violent drop in stock prices. UBS notes that "77% of stock crashes are driven by earnings announcements (Ak et al 2016)," and more companies are likely to disappoint the market in the future. Here's UBS (emphasis ours): "We believe we are witnessing the end of the credit cycle. Earnings growth rates are flat and ...
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