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>> Turkey is a continent away from Wall Street, but its political and economic problems are feeling very near. The US stock market lost ground Friday, along with markets across Europe and Asia, on fears reminiscent of the European debt crisis. I'm Conway Gittens in New York. What Wall Street fears the most is the domino effect.
Now while it's mostly European and Asian banks that have exposure to Turkey, which, by the way, has an economy that's not even the size of the state of Florida, just like Greece a few years ago when Europe was teetering. If the banks doing business inside and with Turkey start to see their business erode, they may have to sell other assets to cover their losses.
And thus, the dominoes start to fall. Add to that concerns out there that banks could be forced to crimp lending to Turkey, and other key emerging economies which were responsible for an outsized amount of global economic growth. Less lending means less revenue for global giants like Citi Group, J.P. Morgan Chase, and Bank of America.
All three were down Friday. And if lending dries up, so does money to fuel construction projects, making material campanies the second biggest losing sector in Friday's sell off. Despite Trump's threats to slap 50% tarriffs on steel coming from Turkey, American producers like US Steel, Nucor, and Cleveland-Cliffs saw their stocks fall anyway.
But the biggest drops are really being felt in the broader market. With a 20% plunge in the Turkish lira versus the dollar, investors fear there could be a hedge fund, a pension fund, or some other large investor who is overexposed. And their financial stability could be in jeopardy, threatening a blow up no one saw coming.