Will markets get even cheaper?
Chris Caton
Although equities are relatively cheap right now, the risk to investors is that they could get even cheaper if the US economy moves further into recession, according to BT Financial Group chief economist Chris Caton.
Speaking at the Perth leg of BT’s Bridging the Generation Gap financial adviser road show, Caton said there was a big question mark over where the US sat in terms of a recession.
Noting that the consensus view among economists is that the US will experience only a mild recession, Caton warned investors that if news out of the country worsened, the recession could deepen, lowering stock prices even further.
“Economists always forecast mild recessions when recessions begin and on this occasion they may be right, and if it is a mild recession, then in my view it’s pretty much already priced in, but the risk is that things will get worse before they get better,” he said.
Caton said markets had not only been in a downdraft for two or three months now, but had also been extremely volatile.
“I think it’s pretty obvious, if markets are volatile, your best assumption is that they are going to continue to be volatile.”
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