James Turk – Global Market Turmoil Continues As This Greatest Danger Now Threatens The World
from King World News
With major markets all over the globe on the move, today James Turk spoke with King World News about the the great danger that now threatens the world.
James Turk: “We should focus on the UK, Eric, and its decision to leave the European Union. There is no question that the UK is the epicenter of the volatility that has roiled global markets Friday and today…
“We are still feeling the shockwaves sent around the world by its vote. But are we seeing tidal waves or ripples?
Did Britain’s FTSE Really Crash?
To answer this question, let’s start by looking at the FTSE 100, the major share index in the UK. The following puts Friday’s stock market ‘crash’ into perspective:
FTSE close on Friday, 17 June 6,021.09
FTSE close on Friday, 24 June 6,138.69
The FTSE 100 was actually up last week notwithstanding Friday’s downdraft.
The low close in the FTSE this month was June 14. The FTSE closed that day at 5,923.50. So even though the FTSE was down again today, it is still up 1% from this month’s low. We therefore have to ask ourselves, what kind of stock market ‘crash’ is that?
What happened before the Brexit vote is important. There was a spike in prices on the FTSE in the days before the Brexit vote. This spike was artificial, and probably was the result of short covering or driven by position squaring. Remember, the last polls before the vote and the odds of bookies in the UK betting shops indicated that Brexit would fail.
So the FTSE was driven higher by latecomers who had positioned themselves for Brexit to fail, and threw in the towel just before the vote. We saw the unwind of all that buying on Friday and today. The important question now is what comes next?
To answer that, we have to look more closely at the components of the FTSE, and for that matter, other stock markets too. One sector clearly stands out as a disaster. It is of course the banks. Their shares have collapsed pretty much everywhere, but particularly in Europe, and not just the UK.