From the 1970s until now, George Soros has built a multi-billion dollar empire. Therefore, many investors turn to him for investment advice. However, not all economists agree with his latest prediction.
Soros speaks of signs that another recession like the one that took place in 2008 might occur. For instance, Bloomberg reports trade halts and declining currency value in China. Furthermore, the Dow Jones Industrial average fluctuated drastically since October before reaching its -392.41 crash on January 7, 2016. According to The Daily Mail, plummeting stock values were the lowest they had been in about three months.
Asian stock market indexes also declined within the first week of January. Likewise, evidences of possible global economic fallout were also prevalent in NASDAQ and S&P 500 indexes during this same period. Economists are still investigating this matter, but currently the main cause seems to be the devaluation of the Chinese yuan. In fact, this country had stopped trade twice during the same week as the January 7 crash.
It’s times like these that often make investors nervous. As a result, George Soros started warning people that another 2008 market crash could be coming. However, is there really enough evidence to support another possible recession? Determining this usually requires looking at several factors that could trigger a sudden economic change.
For instance, The Economist reports that the United States manufacturing ISM index right now reads at about 48.2, which is not far from the standard 50-point level expected. However, it seems that economists would be more concerned if this number were to drop to 45 or less. Currently, a more important concern is the fact that China’s debt-to-GDP level has risen by 50 percent within the past four years. The fear that other Asian countries will also devalue their currencies also seems to be very real right now.
On the other hand, it seems that the services sectors in the United States are doing quite well. There is even signs of increased employment in these fields. Furthermore, Germany experienced a modest 1.5 percent increase in new orders in November. In addition, there is now an increased awareness of the reckless spending that took place in 2008 as related to obtaining loans for various reasons despite credit history.
George Soros might be onto something – that investors need to be cautious. His hugest concern is not necessarily what will happen, but rather he is keeping an eye out for what could happen. As a world-renowned hedge funds investor, his opinion on the economy seems to be well-respected.