Chovanec: The Hong Kong protests could be a source of financial instability in the world

Chovanec: The Hong Kong protests could be a source of financial instability in the world



why do you think the Hong Kong protests could be sort of a Black Swan event for stocks well remember Black Swan means a unlikely but very highly consequential development and in the case of Hong Kong look there's a you know people turn their TV on and they don't really fully appreciate this is a regional financial centre you know one of the top three or four in the world and people are it's it's mainly happening during the weekend so people do do still go to work they still function the banks still work but there's a lot of people talking about taking their money out of Hong Kong and if that suddenly happened you could have a source of financial instability in the world that people don't see coming well we've got the protest so it's not truly a Black Swan we've seen the police firing rubber bullets into the crowd they've been beaten people with clubs it's gotten violent over there but yet the markets have not yet reacted why not well I think because we see this sort of thing you know in Bangkok or we see it in other places around the world and we just figure well it's it you know nothing really will amount to anything but this is a the issue is rule of law it's what makes Hong Kong distinct it what it's what makes people keep their money in Hong Kong and when that comes in the question you're talking about a large pool of money that could leave and you know m''d send some shockwaves what are the odds that this happens Patrick oh well I says Black Swan so I don't want to make it out like I'm predicting it this is what's going to happen but it's just something to keep an eye on given the fact that markets seem pretty happy right now and are sort of pricing in that all good things will happen has the Fed rate cut that we are likely to get tomorrow hundred percent chance based on Fed Funds futures rates right now and that's all the percent according to my math has the market already priced in a rate cut well clearly the Bob market is expecting it to happen who would be surprised if it doesn't the issue though I think for broader markets is that there's a reason why the Fed is cutting rates or is likely to cut rates and it's because there are weaknesses in the economy you know we got 2 point 1 percent GDP growth last week that was better than expected but really the things that drove that were consumption and government spending everything else was negative we had a sixth straight quarter of decline in residential investment we had the first quarter of decline in business investments and trade was you know not very impressive with exports declining and an import stagnant so there were a lot of sources of weakness in the in the economy that we need to watch out for what's the best part of the market right now Patrick well the fact remains that what's expensive in this market is actually risk is risk off assets it's it's safe harbors and even though you know I think there's a bump be had awry a head for the bumpy ride ahead for the for the stock market that doesn't mean that people aren't better off going and hiding here they're better off riding that out you you

6 thoughts on “Chovanec: The Hong Kong protests could be a source of financial instability in the world

  1. We dont care about business… We will pull down all Central District if necessary, to reach our goal: Freedom & Independency!

  2. Dumb fool. Protesters are ensuring that Hong Kong don't turn into a communist-population where all your investments are at stake and "free market" eroded.
    All your stocks and investments ended up in "insider tradings" from due influence.
    Ever imagined trading in Moscow?

  3. So consumption, employment, service sector PMI are all doing well, so what should the Fed do. Lowest unemployment, inflation under control, GDP 2.5%. Cut rates so that asset bubbles get bigger. If this economy can’t handle 2.5% interest rates then the debt is too large. Reduce debt not cut rates.

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