Today the Turkish central bank took an unprecedented action, jacking up the overnight rate by 425 basis points to 12% (see post) - which sent the lira up by over 3%. Higher rates make a currency more attracive and more expensive to short.
While this move will be covered in the media for weeks to come, it's not the point of this discussion.
We've gotten numerous comments from US investors who question the need to track what's going on in a place like Turkey - other than for curiosity. How does the value of the lira impact the price of AAPL or MSFT? Well folks, in these highly interconnected global markets, it does. The chart below shows what happened to the S&P500 futures in response to the lira rally. The days of US investing in isolation are over - something we learned from the Eurozone crisis.
We've gotten numerous comments from US investors who question the need to track what's going on in a place like Turkey - other than for curiosity. How does the value of the lira impact the price of AAPL or MSFT? Well folks, in these highly interconnected global markets, it does. The chart below shows what happened to the S&P500 futures in response to the lira rally. The days of US investing in isolation are over - something we learned from the Eurozone crisis.
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