Every prediction is correct... at some point in the future. However, there are economical indicators that would be considered teaching points if a financial crisis were to occur at any point in the next two to five years:
Government indebtedness: Traditional safe heaven economies, such as the US, UK, Canada and France have a debt-to-GDP ratio well over 100 percent, and the case of Japan, reaching 250 percent. In the US deficits are surpassing the $1 trillion mark, thanks to impossible non-discretionary social programs at the time of the baby boomers' retirement age, as well as recently passed tax cuts. Debt auctions by the US Treasury have been slowly increasing and being met with mostly lukewarm enthusiasm, signaling future problems in refinancing. The CRFB estimates that interest spending will rise from $263 b. (1.4 percent of GDP) in 2017 to $965 b. (3.3 percent of GDP) in 2028. Depending on the relative health of the euro, and crowding effects in an expanding healthy private economy, interest rates above 3 percent could become the norm.
Corporate overleverage: S&P warned of high corporate debt reaching levels difficult to offset even after the recently enacted tax cuts:
Based on a global sample of 13,000 entities, the agency estimates that the proportion of highly leveraged corporates - those whose debt-to-earnings exceed 5x - stood at 37 percent in 2017, compared to 32 percent in 2007 before the global financial crisis. Over 2011-2017, global non-financial corporate debt grew by 15 percentage points to 96 percent of GDP.
Here's a telling chart created by Bloomberg:
There is no need to invoke things like increase in margin trading, the long-running bull market, possible overheating of the housing market, or other random points to overfit the idea.
The question is
Is reducing exposure to bonds a good idea to hedge against (likely?) hikes in interest rates in the next few years? I see the economy healthy overall, with employment at near capacity, wages slowly inching higher, and personal consumption and indebtedness in better shape than in 2008, so holding passive mutual funds in stocks with broad exposure still seems like the wisest route. A minimal gold hedge is already factored in.
I know you can look into futures contracts, ETN with inverse returns to government debt, CDS or other financial alchemy, but I like it simple, and don't know much.