JP Morgan reckon the next big financial crisis is only two years away
It's been 10 years since the last major worldwide financial crash brought down Lehman Brothers, and according to JP Morgan the next crisis could be just round the corner.
Strategists at the investment bank have created a model which predicts the timing and potential impact of the next financial crisis – and they reckon it'll happen in 2020.
The investment bank said the next crisis will be less severe than the 2008 crash, but predicted a US share drop of 20 per cent.
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It also reckons there could be a 35 per cent fall in energy prices, and base metals could lose 29 per cent of their value. In emerging markets, shares would lose 48 per cent, and shed 14.4 per cent in emerging currencies.
"Across assets, these projections look tame relative to what the GFC delivered and probably unalarming relative to the recession/crisis averages," said JP Morgan strategists John Normand and Federico Manicardi.
During the recession, the American S&P 500 index fell 54 per cent.
"We would nudge them all at least to their historical norms due to the wildcard from structurally less-liquid markets," they added.
In a previous note, JP Morgan's Marko Kolanovic has said the shift from actively managing investments through index funds and quantative based trading strategies, has increased the danger of market major disruptions.
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