Trading Diary (March 06, 2009) --- The Going Concerns

US equities imploded as financials continued to crater. Citi fell below $1 intraday and BOA's market cap falls to just over $20bn after major US banks’ rating D/G by S&P or under review by Moody’s. Other big blue chips were in deep trouble as well, GE CDS rose 60bps to 1037bps even after mgmt said the finance unit will be profitable this year, while GM lost 15% after its auditors made a "going concern" ruling…Yes, the markets have going concerns…

I think overnight market momentum suggest investors are putting their doubt on what magic tricks can central bankers can use to stop the –ve feedback loops. Even after rate cuts (50bp) from BOE& ECB and move to QE, I saw no responses on all the asset classes --- equities -4%, oil -4%, gold up 3%, 10Y -16bp. The liquidity injection just does not work in a world rushing to deleverage. Market confidence has been shaken and the technicals reflect a market prepared to run to even more painful levels as many see the crush of asset deflation as the only mechanism left to fix years of easy living …Now the next supporting line for SPX is set on 600…Now we have another painful day to wait for NFP number, which will tells us how much the market pain translated into the real economy. 

All the game now seems rush to the FX world with currencies finding their real value, including GBP, EUR, BRL and KRW. The strengthening of USD to me indicates that there is plenty of dislocated money to find as safe haven rather than the logical exits…Back to local market, its HIS and HSCEI rebalance day…But with the burst of “China 2X stimulus” dream burst soon, I would think selling the over-owned HSCEI names (you name it!)..HKCN ADR down 5-7% and HSBC lost another 7% in London….Sit tight…

Overseas Market Reviews

After rebounding 2.5% on Wed, global equities dropped 2.7% overnight and 20% ytd. US equities have fallen 24% compared to -19% in EU, -16% in Japan and -8% in EM. Elsewhere, USTs saw a bull flattening with 2yr dipped 6bp to 0.88% (down 9bp wow), 10yr fells 16bp to 2.81% (down 20bpwow) and 30yr dropped 18bp to 3.49% (down 22bp wow). 1MWTI oil decreased $2 to $43.61/bbl. USD closed at EUR1.254 and YEN98.1.