If The Markets Were Healthy Brexit Would Be A Non- Event – Ep.177

  • It was Turnaround Tuesday in the global financial markets as stocks are recovering from 2 days of carnage following the surprise Brexit vote in the U.K.
  • The Dow was up almost 270 points today, NASDAQ up about 97
  • But really the markets got beaten up the last couple days
  • The smallest bounce was from the banks, which have been beaten up the most
  • So they had the biggest drop and the smallest bounce
  • Which really shows you how weak that sector is
  • It couldn’t even manage much of a dead cat bounce
  • In fact, the carnage in, particularly the European banks is much bigger than it was during the financial crisis of ’08
  • This really shows you how much more levered up the banking system must be, thanks to all these years of QE and negative interest rates
  • And of course, how much farther behind can the American banks be from their European cousins?
  • U.S bank stocks, too, were hitting 52-week lows yesterday
  • I still think there’s a lot of carnage coming
  • Some banks may be in a position where they are going to have to raise equity, which means they’ll have to sell stock
  • Clearly the market is not going to like that
  • But again, everybody is blaming this on all the uncertainty surrounding Brexit
  • To me, if we had a healthy financial system, if the markets were sound, and prices were based on fundamentals
  • Would it really make that much of a difference if the UK were in the EU or not?
  • What is being revealed here is the fragility of the whole system that is being propped up artificially by the banks
  • By cheap money, low interest rates – everybody is speculating
  • And everybody is assuming that the powers that be, whether it is the politicians, the governments or the central banks have everything under control
  • It’s a big put out there and nothing can go wrong
  • And then when something does go wrong, then people get nervous
  • The wake up and say, “Wait a minute! Maybe it’s not as safe as we thought!”

Peter Schiff is an economist, financial broker/dealer, author, frequent guest on national news, and host of the Peter Schiff Show Podcast.



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