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Wednesday, November 28, 2018

Fed Warns That A "Particularly Large" Plunge In Market Prices Is Possible If Risks Materialize

By: Jeff Cox

The Federal Reserve issued a cautionary note Wednesday about risks to financial stability, saying trade tensions, geopolitical uncertainty and a buildup in corporate debt among firms with weak balance sheets pose strong threats.

In what is often a boiler plate report on conditions in the banking system and corporate and business debt, the Fed instead warned of "generally elevated" asset prices that "appear high relative to their historical ranges."

In addition, the central bank said ongoing trade tensions, which are running high between the U.S. and China, coupled with an uncertain geopolitical environment could combine with the high asset prices to provide a notable shock.

"An escalation in trade tensions, geopolitical uncertainty, or other adverse shocks could lead to a decline in investor appetite for risks in general," the report said. "The resulting drop in asset prices might be particularly large, given that valuations appear elevated relative to historical levels."

Read more at CNBC.

(THL) When the Federal Reserve starts talking like Peter Schiff, there might not be much time left to get out of soft assets and get defensive with your investments.

"Dr. Doom"

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