What are the risks on the market at the moment and what can expect?

High credit, fierce competition, and expanded ratings can be potential market destabilizers, said Paul Ruddock, co-founder of Lansdowne Partners.

The high level of credit is an area for which investors need to worry, as the level of government indebtedness has risen dramatically over the last 10 years, mainly due to the quantitative easing programs. Central banks have launched a policy of low interest rates as a result of the financial crisis of 2008. and have just begun to cut some of the reliefs, albeit slowly. The extended use of low interest rates increases the readiness of people and businesses to borrow more money because their costs are lower, which in the last ten years has led to a significant increase in the debt in the private sector as well.

Despite the long period of low interest rates, Rudoc does not think the economic environment will change, potentially increasing the risks of high levels of lending. Quantitative relief is still necessary, he said, given the high level of government indebtedness in the world. According to Rudok, interest rates will be increased, but at a very slow pace.

At the same time, the investment climate is more difficult than ever, due to the strong competition generated by cheap credit and higher ratings by most companies.

In support of Rudoc, Vitor Constancio statement that the ratings of US companies are too high is a risk to world markets. Investors take too high a risk and literally "stand on the button". Even if there is even a slight economic shock, investors are likely to sell out their risky investments. Then we can expect a deeper adjustment.

Source: Bloomberg Pro Terminal

Jr Trader Petar Milanov

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