Gavyn Davies: What caused the equity crash?

Livewire News

Livewire

The extreme turbulence of the financial markets in August resulted in a temporary rise in the VIX measure of US equity market volatility to levels that have been exceeded on only a few occasions since 2008. In order to reach a judgment on if it is over, we need to form a view on what caused the crisis in the first place. The obvious answer is “China”. The response of the Chinese authorities to the stock market bubble, and the manner in which the devaluation of the renminbi was handled, raised questions about policy credibility that added to ongoing concerns about hard landing risk in the economy.. Was China the only factor involved? New econometric work published by my Fulcrum ((VIEW LINK) suggest that the perception of an adverse monetary policy shock may have been important in explaining the financial turbulence, in which case the Fed needs to tread extremely carefully as it approaches lift-off for US rates. Read full blog at (VIEW LINK)


1 topic

Livewire News
Livewire News
Livewire

Livewire News brings you a wide range of financial insights with a focus on Global Macro, Fixed Income, Currencies and Commodities.

Expertise

No areas of expertise

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.

Comments

Sign In or Join Free to comment