BLACK SWAN

Last Friday was a real black swan event. US stock markets started the session in massive green. Europe was in a huge gain also but in the afternoon had arrived the news about some clashes between Russian and Ukrainian militaries and the market plunged rapidly and closed most of European indices in huge red.

• DAX - 1.43%
• CAC 40 - 0.75%
• FTSE MIB - 0.29%
• IBEX -0,71%

That was a real black swan event. It always comes out from the clear sky and destroyed all the optimism on the floors.

We have now so many geopolitical turmoils like the Islamic militants are seizing Iraq, Russian troops are marching on the border of Ukraine, the Ebola outbreak in Africa and the Israel vs. Hamas conflict in Gaza. In those conflicts any day could occur easily any bad news which effect massively to the markets. But those are only able to change the direction for hours or days - as you see by now all indices recovered from Friday lows – because the major trend is bullish and the winning side is the long one.

This kind of extreme foreign exposure of the markets is pretty rare, but we have to live with that. That is the part of this business, the choppy market some days. Obviously the US and European economies aren’t immune to it. Specially, there are so many concerns about German economy. Europe's largest economy is the most vulnerable because tightly linked to the Russian natural gas. But I doubt that could come any recession in Europe.

This morning’s recovery after the opening in DAX. Nice, isn’t it?

The BFM Assets Team.