- The Great Britain has chosen to leave the EU. The event is called BREXIT and it changes the economic landscape in a major major way.
- BREXIT came as a big shock to the Global Financial market and this is how market responded to the event
- The rise of Fear: The CBOE Market Volatility Index VIX, +49.33% which gauges the level of fear in the financial markets, soared 49% to 25.76, notching its biggest one-day percentage gain since Aug. 8, 2011
- What happened on August 08 2011?
- Back to BREXIT: Is it like Titanic hitting the iceberg? Will it sink the European Union?
- Why EU is such a big deal? - The adjusted GDP of the 28 EU member nations is bigger than both China and the US
- History tells us - One sided Divorces are always ugly. Germany is ready to offer new deal to avoid BREXIT.
- “Exit negotiations should be concluded within two years at max. There cannot be any special treatment. Leave means leave.” ~ German Foreign Minister
- If the UK manages to endure BREXIT without much hardship – then it will be difficult to keep EU together. Hence, there will be temptation to make an example out of it.
- Immediate impact on UK citizens: Imported Inflation with Pound at 30 year low
- The country without Leadership
- The Fear: Recession
- Referendum is a dirty business. “The Brexit vote reveals a country split down the middle.” ~ Economist
- This is what Referendum has achieved: "The future of the young Brits has been decided by people who are over 50 years of age"
- This is what referendum has achieved geographically
- This is what referendum has achieved for UK.
- Bank stocks are falling the most. Higher Uncertainty means Higher Volatility which will result in Lower Capital Market Activity leading to Less Transaction and Lower fees and Income for Banks.
- The Big Problem: Market never anticipated that BREXIT will happen.
- The Impact on India: Here's USDINR chart. The number to watch is 68.8
- Can Indian economy survive: REXIT + BREXIT combo? Keep an eye on currency
- Here's PoundINR chart
- Why Bulls still have an edge despite all the chaos? -"Relative valuation of stocks compared to Treasury yield"
- “We can all say goodbye to near term rate hike from the Fed” ~ Jim Cramer.
- Nobody has gone broke, so don’t compare this to 2008. Nothing changes in near term except Big companies will scale back their expansion plans in times of uncertainty and hence there will be impact on Growth. How much – nobody knows?
- No amount of analysis can tell you about the future. It's all function of luck from here on. The big question: Will the animal spirits be alive in current environment? The answer seems to be No 🙁
- During times of uncertainty - people buy Gold. Gold is now above $1300. Here's Gold miner ETF chart
- The Biggest risk that stares us: US election. The countries are turning more nationalistic and protectionist and that's not good news for Global trade.
- If we no longer trust each other, if we move away from each other rather than towards each other, the world cannot be rich. ~ George Orwell in his essay, ‘England your England'
- Twitter wisdom
- The monkey in middle reflects the true state of market right now
How bad was today's market sell-off?
Over $2.1 trillion in value lost in stocks globally. pic.twitter.com/QRVSlTLjDW
— CNBC Now (@CNBCnow) June 24, 2016
S&P Downgrades U.S. Credit Rating for First Time Ever http://ow.ly/5XF8j
— CNSNews.com (@cnsnews) August 8, 2011
Alan Greenspan says Brexit is the "tip of the iceberg" for Europe: https://t.co/5frbBKnFrB
— MarketWatch (@MarketWatch) June 24, 2016
Sky News is already selling the idea that the EU could offer the UK a "new deal" to avoid #Brexit. Fuck that. We're out. Deal with it.
— Paul Joseph Watson (@PrisonPlanet) June 24, 2016
David Cameron told his aides 'Why should I do the hard s**t?' immediately after resigning https://t.co/BnbdlrqFfI
— The Independent (@Independent) June 25, 2016
We have opted for unemployment, no trade, low wages and a recession - but don't worry because we are 'free' #WhatHaveWeDone
— Elle-Louise Smith (@Elle_smith95) June 24, 2016
The Brexit vote has exposed a Britain fractured by class, by geography, by income and by generations. It's the UK that's unravelling.
— julian dobson (@juliandobson) June 24, 2016
— Business Insider (@businessinsider) June 24, 2016
Probability of a US Fed rate CUT is now greater than a rate HIKE
— AGORACOM - George (@AGORACOM) June 24, 2016
Todd: Elites Beware - Trump and Brexit Same 'Revolt of Western Middle Classes' - Breitbart https://t.co/IjckMStQHt
ONLY A TOOK A YEAR 😴💡🙀
— VoteForTrump2016 (@ernieHHI) June 24, 2016
Trading is not always about profitability … sometimes its about smart protective hedging.
— David Stendahl (@David_Stendahl) May 26, 2016
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Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers