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Seeking Perspective from a Hong Kong Beach

By Benjamin J Butler

 

Hong Kong

 

What scares me the most is the rising number of statistically-significant flash points in financial markets in recent months. This highlights to me that something is amiss: a 40% intraday move in the Swiss Franc, the collapse of oil and the breaking of the uptrend since 2002, the bund crash, the flash crash, China markets plummeting the most since the 1990s and then yesterday the NYSE seized up for 4 hours. What was this? What concerns me about the next financial market crisis is that liquidity occasionally dries up and things like this happen. If this happens after a very bad economic number or another plummet in a globally significant market like China, we could easily see another 1987 style meltdown in developed nations’ markets like the US. This NYSE event highlights the fragility of markets here and the presence of so many algo traders and “flash ... Log in or subscribe to continue reading.


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