Shanghai's stocks don't carry that much value...a huge huge huge amount of money would have to leave there and find its way here to have any obvious impact on our markets.
It was down close to 9% that one day earlier this week. That is sizable amount of money in any stock market in the world. Probably something like $200B left Shanghai. nitro
But the point is that just because the market was down 9% doesn't mean that 9% of the value of the market was removed into liquid. It means the stocks traded at lower prices, for all you know the whole market could have just decided to pay 9% less for stocks that day...both buyers and sellers agreeing that lower prices were good. We both know that didn't happen, but to even assume that 9% of the value of the entire market was removed, then in the course of a day made its way around the world and all got pushed into the US markets is kind of insane. I don't understand how you can think that's a factor. There is too much liquidity in the world. You could have witnessed even stronger up days when the Shanghai index went up 5%...where did that money come from?
True, but in liquid markets, there is a very close relation between money leaving, and prices. In order for ES to move down 3%, you have to really want to sell, because every level is liquid. Shanghai is not the US, but there is tons of money flowing there. It is a theory, not a fact. nitro
Liquid is a relative term. The same money flowing out of the US would have been a -3% day, or maybe a little higher. So Shanghai is 1/3 as liquid as the US. A great deal of the US investment in China is natural resources. We import a huge % of our nat resources from China. I don't know the relationships between the SH stock market and the nat res sectors... nitro
You think the Shanghai carries 33% of the value of the US markets?!?!?!? :eek: What are you talking about? I must be totally mistaken because it seems like you're just throwing shit to the wind and hoping it sounds like something that makes sense. I really have no idea what you're trying to say.
The carrying capacity of any market US or otherwise is constantly changing. That is why markets in the summer in the US are far less liquid than in during other months. At any given point, the carrying capacity of two markets should not be measured by how much money a company is worth (in capitalization), but by how liquid a given price is. Carrying capacity is a function, not a number. I estimate that there is one buyer and one seller in SH for every three buyers and sellers in the US "today". nitro
You continue to barely make sense and how do you estimate 3/3 buyers/sellers? Where in the hell does that come from?
Like I said, it is an estimate. The estimate is based on the percentage drop of SH on a key day,and the money that is flowing into other markets around the world that I believe is a direct consequence of that exodous. The exact computation is not soemething I can describe. nitro