Sixth of May 2018. A day I simply cannot manage to erase from my recent memory region. US markets plunged nearly 10% on a single day!!! Dow Jones Industrial Average crashed 1010 points looking at the day high. New York Times headlines screamed, “Stocks Plunge on Concerns Over Greece”. Investors on Wall Street are still licking their wounds as well as the public sympathizes.
Concerns over Greece?
What was so new about concerns over Greece on that one day that stock prices must be reduced to a few cents and then created to rebound as much as 70% in an hour roughly? By the way, financial problems facing Greece had not been a new fact uncovered that very day that market players were required to sell off in utter shock anything and everything coming soon in such tearing hurry. In fact on 18 Dec 2019, I had published a post titled “Debt Laden Dubai – When Will The Woes End?”.
In that post, I had indicated that Greece and Spain were simmering with debt troubles and global investors were worried about that account than Dubai defaulting. It was well known in global investment circles during the last six months roughly that Greece was tottering on the serious financial disaster and could be the to begin the European nations to start the Domino Effect. Now would the regulators please tell the US public as to what happened on 6th May 2018 and have been the extraordinary beneficiaries?
One can understand European markets selling with one or the other not so great news. First from your blocks was Greece having its credit contraction, then Spain bailing out among its banks after which Germany banning short selling – everything is understood. North Korea brandishes its sword on South Korea and China goes on the cleanup drive to rein in inflation by pulling back some stimulus packages in small measures. Perfectly fine, but an amount you say when Financial Times on 26th May tells investors with all of the authenticity that China would sell its reserve of Euro bonds. China holds about $ 630 billion in Euro bonds. That news sent jitters around the spine of global investors.
The shock waves created in Europe through the shattering news in Financial Times was so great that Euro currency nosedived and almost became a serious competitor of Zimbabwean Dollar!! With it, the European stocks were dragged down and US exports to Europe presented a great challenge. Pandemonium broke loose in global investment circles. Dow Jones lost 230 points from its day high. Investors were planning their exit strategies further in the event the very next day China inside a surprise move rubbished this news of Financial Times and reiterated its faith in Euro along with the European Union. European markets and Euro rebounded with zest and Dow Jones gathered 295 points extra weight.
In all of this high drama, a very important factor sticks out very clearly. Influential parties will go to the length and accomplish … Read More