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Investors need to prepare for a US recession followed by a global slump in 2017

23-Oct-2016 :

Dubai: The world is facing a heightened probability of recession that could wipe out asset values significantly across all asset classes next year warns Steen Jakobsen, Chief Economist and Chief Investment Officer of Saxo Bank, the online trading and investment specialist.


The shifting focus of major central banks from quantitative easing (QE) programmes to fiscal policy boosts through potential backdoor helicopter money will have knock-on effects that could lead the world into recession next year, Jakobsen told Gulf News in an interview.


The by-product risk of central banks increasingly looking to use indirect helicopter money to spark economic growth is the creation of strong economic currents which bring much higher volatility, risk and a stronger US dollar, believes Jakobsen.


“A stronger US dollar combined with the US Federal Reserve’s intention to hike interest rates by December this year almost guarantees a dramatic increase in the probability of a recession in the US. This recession will be the real challenge to the policymakers and what’s unfortunate is that it comes during a period when there are several major elections in Europe and the US,” he said


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