User:Oceanflynn/sandbox/Global market turmoil (2016)

Global market turmoil (2016) refers to the chaos in global stock markets against a backdrop of geopolitical uncertainty. From 1 January to 11 February "financial shares in the S&P had lost roughly 18%." The International Monetary Fund expressed concerns about the sharp declines in February in the share prices of European banks.

Analysis
Based on data from Ryan ALM (Treasury's); Tradeweb (yields); FactSet (financial sector, STOXX Europe 600, DJIA, Shanghai Composite, MSCI); ; International Monetary Fund (October vs January projections; SIX Financial (futures) and the (Deutsche Bank as of 2 February 2016), the Wall Street Journal listed five theories to explain the chaos in global markets. Low interest rates create a "thorn for banks" affecting the 30-year government bond yields and S&P financial sector; devaluation—of the Chinese yuan against the US dollar, for example—"unnerves investors," (Tullett Prebon (yuan)) "global slowdown poses a risk for growth in the United States as seen in the MSO Emerging markets index and the cut to growth projections by the IMF; The collapse of the price of oil reflects concerns about the demand side as reflected in NYMEX crude oil futures and world demand for oil change from a year earlier in the International Monetary Fund's October vs January projections. The fifth theory concerns the exposure to sovereign wealth funds with oil-rich countries owning percentages of Nasdaq—UAE owns 18%; Tiffany—Qatar owns 12% and Norway owns 9% of Aflac and 7% of BlackRock (Deutsche Bank as of 2 February 2016).

Disconnect between stock market and real market
There is a "puzzling disconnect" between the "market bloodbath" on 10 February 2016 and the real market—in "streets, shops and factories." According to an article in The Guardian, "financial instruments that track markets, such as exchange traded funds and commodity trading advisors" are "turning stock markets into casinos."

""There is no fundamental reason for the market to be in this state...… We think it’s because the market is dominated by people who do not invest on fundamental factors... It is creating a situation where the market is separated from reality. It’s Alice in Wonderland. They are turning stock markets into casinos.""

- Saker Nusseibeh, chief executive of Hermes Investment Management 11 February 2016