Not that the economy is on the cusp of rolling over, although our own assessment is that it's presently the closest it's been since 2008, but when it ultimately gets there it looks to be very ugly under the surface.
I.e., the extent (or depth) of the potential downside risk going forward is substantial: emphasis mine...
"Easy financial conditions have supported financial risk-taking in the nonfinancial corporate sector. Vulnerabilities in the corporate sector continue to be elevated, particularly in China, other emerging market economies in aggregate, and the United States."
"... debt issued by companies whose earnings are insufficient to cover interest payments is elevated relative to GDP in several economies and could approach or exceed the crisis levels in an adverse scenario, which is half as severe as the global financial crisis."The following from the report speaks to what explains the stock market's presently lofty level ("easy financial conditions") and sympathizes with the message (where I offer reasons for the seeming complacency in today's market) in yesterday's post:
"...the easy financial conditions and stretched asset valuations at this late stage of the cycle suggest that investors may be overly complacent about downside risks."
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