On the heels of a chaotic trading week in global makets, particularly in currencies, today a legend in the business warned King World News that the worldwide liquidation scramble could morph into a full-blown 2008-style collapse.
50-year veteran Art Cashin warned the worldwide liquidation scramble may morph into a 2008-style collapse
Art Cashin: “There is great instability in the currency markets around the world and it will not make for too restful a weekend here until we get a chance to see how this all begins to play out.
There Is A Worldwide Liquidation Scramble
The other thing they (traders) noted is that commodities, things like copper and other base metals along with the grains, are selling at very, very low prices. And it looks like all around the world, nations are straining because their economies are slowing down and there is a liquidation scramble.
It is hard for me to believe that with commodity prices dropping the way they are the Fed will be comfortable raising rates because this looks like more deflationary pressure coming in the short run.
You’re seeing the CRB Commodity Index at multi-year lows. You look at things like copper, it’s almost half the price of what it was. Coal and coal companies are going out of business. You’re going to find some of these commodity related businesses not only not being able to pay their dividends, they won’t be able to pay their debt. I’m looking for some insolvencies there and that’s going to reverberate through many of the other markets.
Things Could Begin To Get Out Of Control 2008-Style — Plan Your Exit
My concern is that the central banks continue to be in almost a game of ‘chicken’ here. And as we saw in 2008, and at other times in my 50-year career, markets can sometimes tilt and totter out of control. I don’t think anybody is in a full position to control things here, and unless they (central banks) work together, and the signs of a currency war don’t indicate that’s happening, then things could begin to move out of control.
You could begin to see some of the emerging nations suffer, fail to pay their debts and start to see that situation spiraling (downward). We’ve seen it before. We’ve seen things like this in 2008, and the only way you get through 50 years in this business is whenever I walk in a room I look for the exit sign to know where my out is.” ***KWN will be releasing interviews all day today and this weekend.