Wave Chronicle Statement: World Market Watch
It has been an odd year for the world markets. Most markets, currencies, and commodities have been on a roller coaster ride this year. What has me concerned and why I have issued the World Market Watch is from a few separate issues. One is obvious and that is Greece, the other is a surprise and that is China.
Greece is a failed financial system, it does not matter if they vote “Yes” or “No”, suffering will happen with either choice. For the Greek people, the Wave Chronicle believes that a “No” vote is best for the Greek people. You will have a shorter recovery with a Greek owned and managed currency.
The concern is whether the Greek implosion will be a contagion to the world market. The Wave Chronicle is stating “No”, the contagion will not expand to unrelated markets. The Greek collapse will have a toll on the EU market, nothing would have changed this reality. Below is a couple of images from the BBC.
When you review the two images, the contagion should be held to the EU markets only. You will have a marginal issue with the US market. EU market should be a blood bath when Greece reopens, with a small cascade issue in the US. You will not have an issue with BRIC nation group.
What I believe to be a bigger threat is the following:
China has lost roughly 2 Trillion dollars over the past few weeks. The volatility in that region is a greater problem to the world markets on it’s own without the pending Greek implosion. Since June you have had market swings of 5 to 6 percent on a whim. The Shanghai market has lost 24% since the middle of June. Mind you it is still up 20% for the year but the volatility is the problem.
Below is a good solid opinion from China about China’s market issues:
Some of the issues may arise from an increase in margin trading accounts, which has grown by 86% in 2014 alone. You also have issues with fundamentals, which may be another issue that has to be addressed by the Chinese Government. At the end of the day, if China has to slow down and adapt to negative market issues, it may not be able to continue to buy the Worlds debt.
Then you add the ongoing issue of QE to infinity, ongoing in Europe now and the negative interest rates, then add the Greek debt default. I cannot see a way forward for the EU. I also do not believe that America will be able to intervene regarding negative market conditions.
For all of these reasons and a few others, A World Market Watch is Ongoing.
Sources:
http://www.bbc.com/news/world-europe-33391913
http://money.cnn.com/2015/07/02/investing/china-stock-markets/
http://money.cnn.com/2015/06/21/investing/china-stocks-bubble-retail-investors/?iid=EL
