After markets rebounded after they fell to their lowest point on Tuesday. Economists are warning that there are signs of a Lehman Brother’s like collapse.
“At this point, we think it would be a mistake to dismiss the possibility of a Lehman-like shock as a mere tail risk,” Nomura macro and quant strategist Masanari Takada said in a note Tuesday. “The pattern in US stock market sentiment has come to even more closely resemble the picture of sentiment on the eve of the 2008 Lehman Brothers collapse that marked the onset of the global financial crisis.”
The next sell-off could resemble a Lehman Brother’s like collapse. Nomura is basing its view on data showing hedge funds fleeing the market and said more are set to exit when their algorithms are triggered by rising volatility.
Read More: CNBC