Saturday, March 1, 2008

Mkt summary as 03/01/2008

--Tumult spread to Muni Market, where ML Muni broad msater index total return index prices slumped nearly 7% in the past month from 362 to 340. 30y Muni bond yielded at 5.14%, much higher than 30y T 4.42%. Several hedge fund suffered because of their wrong best on market direction. Primco Gross is taking the opptunirty to buy in. --Mark-to-Mkt account rules for trading securities are contirbuting the turmoil, causing domino effect to worsen the negativre feedback loop. Using their unique benefits, some banks are considering reclassifying trading securities to hold-to-maturity securities, avoiding loss on the balance sheet. This move put brokers at disadvantage. --Market remain volatile, swinging more than +5% in the past week for S&P. Disciplined Mean-reversion technical trading is an suggesgted strategy given the market conditions. Don't be greedy! --Financial Institutes have more to loss. UBS forecasts the loss will exceed $600 bil and Banks and Brokers will lose $350 bil. AIG reported 11 bil writedown and the loss rattled equity market on Friday with a 2.7% drop in S&P. --Annualized GDP in Q4 2007 was revised down from 0.8% to 0.6%. Core PPI 2.3%, above estimate.

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