Hello All,
We haven't seen action like the last 2 days for at least 6 months. Uncertainty at its prime. Volatility has picked up with fear creeping back into the equation. Obama's one-two punch by presenting the Volcker rule today was definitely unforeseen, yet welcomed by many. Setting restrictions on the size and scope of institutions to restrict excessive risk taking startled the financials and the markets tumbled. Precautions to help 'too big to fail' namesakes prevented investors from buying bank stocks now that their profit potential can be limited when final legislation is passed. The credit crisis was due primarily to faulty loans (home, car, credit cards) labeled as excessively risky paper, and now that the big banks have repayed their TARP loans we would assume they are financially stable enough to begin loaning to the consumer. But that just isn't the case, the average American is still waiting for their bailout let alone possibility for employment. The last thing we all want is another crisis and any precaution should be welcomed. Obama wants to restrict bank holding companies from owning, investing in or sponsoring hedge funds. So basically, stop using customer funds for your own benefit. The debate remains that this particular feat was not what got us here in the first place, but with the given volatility and uncertainty in the markets any restrictions should eventually stabilize the markets rather than giving full control to BIG banks. If you throw enough money towards a trade, I'm sure you can make it move in the direction you like, as the banks do everyday.
Needless to say, I won't be making any trades tomorrow as their are too many unknowns. I would suspect some positions to unwind going into the weekend, which could lead to a corrective rally lasting into Tuesday. Ultimately, the Fed announcement will be batting clean-up, so let's wait and see what the score is next week.
Best,
We haven't seen action like the last 2 days for at least 6 months. Uncertainty at its prime. Volatility has picked up with fear creeping back into the equation. Obama's one-two punch by presenting the Volcker rule today was definitely unforeseen, yet welcomed by many. Setting restrictions on the size and scope of institutions to restrict excessive risk taking startled the financials and the markets tumbled. Precautions to help 'too big to fail' namesakes prevented investors from buying bank stocks now that their profit potential can be limited when final legislation is passed. The credit crisis was due primarily to faulty loans (home, car, credit cards) labeled as excessively risky paper, and now that the big banks have repayed their TARP loans we would assume they are financially stable enough to begin loaning to the consumer. But that just isn't the case, the average American is still waiting for their bailout let alone possibility for employment. The last thing we all want is another crisis and any precaution should be welcomed. Obama wants to restrict bank holding companies from owning, investing in or sponsoring hedge funds. So basically, stop using customer funds for your own benefit. The debate remains that this particular feat was not what got us here in the first place, but with the given volatility and uncertainty in the markets any restrictions should eventually stabilize the markets rather than giving full control to BIG banks. If you throw enough money towards a trade, I'm sure you can make it move in the direction you like, as the banks do everyday.
Needless to say, I won't be making any trades tomorrow as their are too many unknowns. I would suspect some positions to unwind going into the weekend, which could lead to a corrective rally lasting into Tuesday. Ultimately, the Fed announcement will be batting clean-up, so let's wait and see what the score is next week.
Best,
Arman Vahdatinia
Futures & Options Strategist
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