Cristy Li

Obamanomics Effect in 2016 –MarketWatch Graph

(MarketWatch) Another brokerage firm has used the ‘R’ word on Tuesday warning investors to wake-up to the idea that rising risks of a Recession could send the stock market over a deep cliff.

Based on current valuations, the prices of most stocks don’t appear to have factored in a recession scenario ‘hence the downside should we see a recession could be rather severe,’ RBC Capital Markets global equity team wrote in research notes to clients.

Applying a stress test to their coverage universe, using a worst case price to earnings valuations seen during the 2008-2009 recession, RBC analysts said that they believe the shares of most companies could still fall another 50% or more from current trading levels.

The concern for RBC analysts stems from the recently volatility in the stock market caused by macro weakness, softness in China and commodity market challenges. — The warning follows a note issued earlier this year at Royal Bank of Scotland (RBS) to investors to “sell everything” ahead of an imminent stock crash. It had warned its clients that 2016 could be a “cataclysmic year.”

Rest here from Intl Business Times

Related: Risk of U.S. Recession — Indicators Most Severe Since 2009 -FT