On June 18, CNBC.com reported that the Royal Bank of Scotland had warned investors in blunt terms that the global stock and credit markets could be on the verge of a steep market sell-off just as central banks have their hands tied by soaring inflation. “A very nasty period is soon to be upon us ? be prepared,” warned Bob Janjuah, credit strategist at RBS.
According to a report from the bank’s research team, as “all the chickens come home to roost” from over-easy lending practices and other excesses of the global boom period, the S&P 500 index is likely to slump.
“I do not think I can be much blunter. If you have to be in credit, focus on quality, short durations, and non-cyclical defensive names. Cash is the key safe haven.” Janjuah advised.
RBS’s warning should not be ignored. Investors should review their holdings to make sure their nest egg can withstand a market sell-off..