股海一粟的博客
投資是一門藝術，投資是一所永遠的學校。股海一粟第一次接觸到股票還是在1988年，那時候上海隻有老八股，沒有正規的交易所。。。那一年股海一粟隻有10歲。
正文
A normally quiet Friday turned out to be one of the most volatile sessions in recent years. All three major indices ended the day down by more than 1.5%. But for the week, Dow was actually higher compared to one week ago while S&P500 lost less than half a percent. The VIX index closed at 31.16, the highest since March 2003 - the month that US launched the second “Gulf War” against Iraq and was marked as the end of the 2000 – 2003 bear market. Can history repeat this time? Only time will tell.
Most of today’s volatility can be attributed to one single company – Bear Stearns. The company last time enjoying this kind of publicity was in July 2007, when two hedge funds of the company collapsed due to their sub-prime exposure. Today, it was the fate of the company itself that unnerved investors. The news that the company’s liquidity had deteriorated severely during the past 24 hours and the Fed has chosen JPMorgan to bail it out sent its shares down by more than 50% earlier in the day. The volume was gigantic as more than 186 million shares were changed hands for a company that has total outstanding shares of just 118 million. The fall of Bear Stearns brought down the whole financial sector and in fact, 8 out of the 10 most actively traded companies on NYSE belonged to this group. The news also overwhelmed a rather bullish CPI report (both headline and core CPI numbers were unchanged m-o-m), which initially drove the Dow futures to a gain of more than 120 points.
The financial market was in a disorderly fashion following today’s event. The US dollar hit a new record low against the Euro while closed at the lowest level against the Japanese Yen in 13 years. Gold price closed above $1000 for the first time in history. The two-year Treasury note’s yield dropped 14 bps to 1.48% after touching 1.37% earlier, the lowest level since July 2003. Traders, meantime, increased the bets of 100 bps interest rate cut at the Fed’s next meeting to 60% from 0% yesterday. The spreads between risky assets and risk-free treasuries were not narrowed much despite the recent actions taken by the Fed. For example, the spread on the current-coupon 30-y fixed-rate mortgage securities guaranteed by Fannie Mae over 10-year notes was 207 bps today compared with an average of about 112 bps in the past five years. As for next week, which is a shortened one due to the Good Friday holiday, we are going to get several brokerages releasing their latest quarter’s results, which may not look good but investors will try to look for clues whether the worst is behind. Also, the Fed is going to announce its latest interest rate decision on Tuesday, which can be a big market moving factor.
Most of today’s volatility can be attributed to one single company – Bear Stearns. The company last time enjoying this kind of publicity was in July 2007, when two hedge funds of the company collapsed due to their sub-prime exposure. Today, it was the fate of the company itself that unnerved investors. The news that the company’s liquidity had deteriorated severely during the past 24 hours and the Fed has chosen JPMorgan to bail it out sent its shares down by more than 50% earlier in the day. The volume was gigantic as more than 186 million shares were changed hands for a company that has total outstanding shares of just 118 million. The fall of Bear Stearns brought down the whole financial sector and in fact, 8 out of the 10 most actively traded companies on NYSE belonged to this group. The news also overwhelmed a rather bullish CPI report (both headline and core CPI numbers were unchanged m-o-m), which initially drove the Dow futures to a gain of more than 120 points.
The financial market was in a disorderly fashion following today’s event. The US dollar hit a new record low against the Euro while closed at the lowest level against the Japanese Yen in 13 years. Gold price closed above $1000 for the first time in history. The two-year Treasury note’s yield dropped 14 bps to 1.48% after touching 1.37% earlier, the lowest level since July 2003. Traders, meantime, increased the bets of 100 bps interest rate cut at the Fed’s next meeting to 60% from 0% yesterday. The spreads between risky assets and risk-free treasuries were not narrowed much despite the recent actions taken by the Fed. For example, the spread on the current-coupon 30-y fixed-rate mortgage securities guaranteed by Fannie Mae over 10-year notes was 207 bps today compared with an average of about 112 bps in the past five years. As for next week, which is a shortened one due to the Good Friday holiday, we are going to get several brokerages releasing their latest quarter’s results, which may not look good but investors will try to look for clues whether the worst is behind. Also, the Fed is going to announce its latest interest rate decision on Tuesday, which can be a big market moving factor.
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