Markets action today was outright frustrating. For most part of the day, the market was moving as I expected. Financial stocks down, Gold up decently (Yday was an amazing day for gold.. the price gain was the biggest single day move in 29 years). At one point, I was up 60% on my gold stocks and I was excited for being so pinpointed right. Post lunch, the whole action reversed, as if the while world conspired against the normal course of fundamental action. I lost all the gains I had, could have put a stop limit on my profits..
These are the actions that changed the whole game:
Central banks pumped money into the market. - Fed had authorized a $180 billion expansion of its temporary reciprocal currency arrangements, known as swap lines, to allow banks to borrow more dollars in markets at a lower rates.
Regulators change rules to soothe the markets - SEC came out with a rule restricting naked short sale of stocks. short sellers and brokers must deliver borrowed shares three days after the transaction or face trading restrictions.
Managers with more than $100 million invested in securities would be required to begin public reporting of their daily short positions.
Eased restrictions that had prevented regulated companies from transferring money to less regulated and more risky affiliates. Now a commercial bank can move the cash from the deposit accounts to its investment baking arm.
Eased the accounitng principles for goodwill impairment.
UK Financial Services Authority imposed a temporary ban on short-selling financial stocks on Thursday
investors with an existing short position of more than 0.25 percent of a financial company's share capital must disclose their holdings every day from Sept. 23
Treasury Secretary Henry Paulson is working on setting up a government facility to take on bad debts from financial institutions to prevent a worsening of the global credit crisis.
Calpers, the nation's biggest pension fund, along with other Pension Funds & Mutual Funds would no longer lend out Morgan Stanley or Goldman Sachs shares to short-sellers.
Result of these announcements (extended over yday and today) is clearly reflected in the price action of GS. Opened at 106, hit a low of 86, made a high of 120, ended at 108. a freaking 50% move between intraday low and high. and AUY (my gold stock) on the other hand, traded relatively strong for most part of the day, giving up its gains in the last hour of the trading... We, indeed, are going through some weird times, and its a crime to have a conviction. The question still is whether these government actions attack the root cause of the trouble or merely help the largest financial institutions to stay in business.
S&P today relased the revision of writedown estimates. I could not figure out the math, but the bottom line is the structured finance instruments are about to hit hard again by two powerful headwinds: first, the consequences of the LEH bankruptcy, deteriorating CDS spreads, and second, a continuing deterioration in the fundamentals (loss assumptions) underlying the structures. Ex: At origin, S&P rated ‘AAA’ approximately 80%, or $960 billion, of the $1.2 trillion in subprime RMBS issued 2005 through 2007, now the revised number is 50%.
In other news, Detroit Auto firms (F and GM) are positive that they would be provided much needed capital to stay afloat.
The " fear index" shot through the 30 level faster than anytime before. Yesterday it had reached a high of 36.40. This morning the VIX crossed above 40 and briefly went north of 42.00.
My inidustry is at stake!! more than 350 hedge funds closed in the first half of the year..!!
These are the actions that changed the whole game:
Central banks pumped money into the market. - Fed had authorized a $180 billion expansion of its temporary reciprocal currency arrangements, known as swap lines, to allow banks to borrow more dollars in markets at a lower rates.
Regulators change rules to soothe the markets - SEC came out with a rule restricting naked short sale of stocks. short sellers and brokers must deliver borrowed shares three days after the transaction or face trading restrictions.
Managers with more than $100 million invested in securities would be required to begin public reporting of their daily short positions.
Eased restrictions that had prevented regulated companies from transferring money to less regulated and more risky affiliates. Now a commercial bank can move the cash from the deposit accounts to its investment baking arm.
Eased the accounitng principles for goodwill impairment.
UK Financial Services Authority imposed a temporary ban on short-selling financial stocks on Thursday
investors with an existing short position of more than 0.25 percent of a financial company's share capital must disclose their holdings every day from Sept. 23
Treasury Secretary Henry Paulson is working on setting up a government facility to take on bad debts from financial institutions to prevent a worsening of the global credit crisis.
Calpers, the nation's biggest pension fund, along with other Pension Funds & Mutual Funds would no longer lend out Morgan Stanley or Goldman Sachs shares to short-sellers.
Result of these announcements (extended over yday and today) is clearly reflected in the price action of GS. Opened at 106, hit a low of 86, made a high of 120, ended at 108. a freaking 50% move between intraday low and high. and AUY (my gold stock) on the other hand, traded relatively strong for most part of the day, giving up its gains in the last hour of the trading... We, indeed, are going through some weird times, and its a crime to have a conviction. The question still is whether these government actions attack the root cause of the trouble or merely help the largest financial institutions to stay in business.
S&P today relased the revision of writedown estimates. I could not figure out the math, but the bottom line is the structured finance instruments are about to hit hard again by two powerful headwinds: first, the consequences of the LEH bankruptcy, deteriorating CDS spreads, and second, a continuing deterioration in the fundamentals (loss assumptions) underlying the structures. Ex: At origin, S&P rated ‘AAA’ approximately 80%, or $960 billion, of the $1.2 trillion in subprime RMBS issued 2005 through 2007, now the revised number is 50%.
In other news, Detroit Auto firms (F and GM) are positive that they would be provided much needed capital to stay afloat.
The " fear index" shot through the 30 level faster than anytime before. Yesterday it had reached a high of 36.40. This morning the VIX crossed above 40 and briefly went north of 42.00.
My inidustry is at stake!! more than 350 hedge funds closed in the first half of the year..!!
No comments:
Post a Comment