Nothing says to me that it makes any sense that the market now has a value of about 5,500.
We’re facing the biggest recession for 80 years, melt down in Europe and global warning becoming reality. And the markets still presume nothing is happening.
If you want evidence of irrationality that’s it.
If the FTSE 100 was a reflection of the domestic economy then he\’d have a point. Possibly.
Rolls-Royce is now an international business that makes 85% of its sales outside Britain, having doubled its exports over the past two decades.
Rolls Royce isn\’t the only one either.
Starting from the top, Aggreko is in 34 countries, AMEC in 40, Anglo American god knows how many (and I\’m not sure that it has anything at all in the UK), Antofagasta is a Chilean copper company, ARM powers just about every smart phone and tablet globally (plus many other things), Ashmore is an investment manager dedicated to the emerging markets (ie, not exposed to the UK economy), Astra Zeneca is a gloobal pharma company….we might think that Admiral, Aviva and ABF are more or less exposed to the UK market. So, that\’s the As….going on down the list, ENRC is a metals producer in Kazakhstan, Cairn drills for oil in India, Essar ditto etc etc etc.
I would be absolutely astonished to find that more than 20% of the actual business operations represented in the FTSE-100 were UK based or largely influenced by the UK economy.
Which is why looking to the UK economy to explain FTSE is simply silly. It\’s just not a domestic market at all.