Stock markets are too high and set to fall, says Bank of England deputy
9 hours ago
- #stock market
- #financial stability
- #economic risk
- Bank of England deputy governor Sarah Breeden warns global stock markets are too high and due for a fall, citing that current asset prices don't reflect underlying economic risks.
- Key concerns include simultaneous risks like a major macroeconomic shock, overconfidence in private credit, and AI-driven valuation bubbles, with 'shadow banking' (private credit) seen as particularly untested and vulnerable.
- A market downturn could reduce household wealth, curb spending, hinder business fundraising and investment, and weaken overall economic confidence, though the timing and extent of any correction remain uncertain.
- Despite warnings about AI investment frenzies and private credit weaknesses, markets have shown resilience, with investors appearing to believe risks are manageable and contained for now.