Hamish Douglass, CEO of Magellan classifies the end of QE as the number one greatest risk to economies and investment markets over the next two years. Douglass, however, concedes that there is a greater than 90% chance of an orderly exit from the Fed's QE program. This positive scenario is prefaced on a steady US recovery, a gradual increase in credit and the Fed reducing its excess reserves slowly. Douglass nevertheless warns investors to consider the alternative scenario of a disorderly unwind of QE. This scenario, he warns, is predicated on a sharp US recovery which would result in rapidly increasing house prices and a strong demand for credit. In this case, the Fed would be unable to withdraw stimulus in time before long-term bond rates spike dramatically to 8-10%. According to Douglass, the havoc it would cause in this world would be extreme. Watch the video here: (VIEW LINK)
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