Sell Everything!

RBS advises: sell everything! 2016 will be 'cataclysmic'

"Sell everything."

That harrowing advice is from The Royal Bank of Scotland, which has warned of a "cataclysmic year" ahead for markets and advised clients to head for the exit. Do not wait. Do not pass go.

"Sell everything except high quality bonds," warned Andrew Roberts in a note this week.
He said the bank's red flags for 2016 -- falling oil, volatility in China, shrinking world trade, rising debt, weak corporate loans and deflation -- had all been seen in just the first week of trading.

"We think investors should be afraid," he said. 

 The world is in a global recession, Roberts wrote. This terrible cocktail means investors should now be thinking about getting a "return of capital, not return on capital."

RBS compares the market mood with that of 2008 before the collapse of Lehman Brothers and the start of the global financial crisis.

My view:

As the quick sell off in the market shows, liquidity is at a premium resulting from the China crisis combined with an interest rate increase by the Federal Reserve.

We must we wary of a market dislocation in the coming days and weeks.  The danger developing is a trigger event may result in a 1987 style market sell off.  Keep your eye on the Middle East as a possible trigger area.

One thing we noticed over the past two days is the under performance of precious metals stocks compared to gold metal.  This may suggest that everything is being sold to raise cash despite gold's safe haven appeal.