Analyst Matt Stopera, an analyst with BlackRock, told CNBC on Monday that there is a “significant risk” that the markets could be “over-leveraged” if the Federal Reserve raises interest rates.
Stopera said that a $100 trillion U.S. economy with “excess debt” is “a huge risk.”
He added that investors need to consider the “significant downside risk” of having a $1 trillion stock market that is “entirely dominated by leveraged companies that are too leveraged to do a good job of running the economy.”
Stoperas main recommendation for the U.T.O. is for the Federal Open Market Committee to maintain its bond-buying stance, which has been a key pillar of U.K. central bank policy.
The central bank is expected to keep buying bonds at a record pace this year as it tries to prop up the economy and boost the recovery.