A Systematic Trader's Journal

Here are some details of the severe repercussions should AIG fall, take this to reference on the impact of the LEH collapse: Sept 17 (Reuters) - (The following statement was released by the ratings agency) Sept 17 - Moody's Investors Service announced today that is has placed its ratings of certain credit derivative transactions listed below (the "Transactions") that have exposure to Lehman Brothers Holdings Inc. ("LBHI") and certain UK Lehman companies, including Lehman Brothers International (Europe) ("LB-UK" and collectively with LBHI, the "LBHI Entities"), on watch for possible downgrade. Additionally, certain other Transactions were downgraded and left under review for further possible downgrade. Moody's explained that its rating action is based upon LBHI seeking protection under Chapter 11 of the U.S. Bankruptcy Code and LB-UK being placed into administration, a procedure governed by the Insolvency Act of 1986, on September 15, 2008...

Today has also been one very interesting day for the financial markets.  With time running out for AIG's vault, it seems like all eyes are looking at the Fed to provide a bridging loan to lend the company a helping hand. Additionally, if rumours are right, WAMU may soon get off the radar screen if JPM has interest in them. Looking at the market on the macro level, we have witnessed the more than $600B in share value that got worthless or disappeared in the financial and banking sector, and historically, equity markets on average drops 26% during a recession, where now S&P 500 has already reached 23%. In addition, current dividend yield of some stocks have begun to surpass yields from Treasury Bills products. One more evidence is taken from Thomas J. Lee, JPM Chief US Equity Strategist in New York, net cash balances in margin accounts at NYSE member firms are highest in at least 50 years, citing $932B has poured into money fund since Aug 2007. So do you think this could be a pos...

Today's events have indeed been a thrilling experience experience for the international markets. As I am writing this, the China Central Banks has just cut its key interest rate again by 27 basis points to spur growth, Lehman (est. 1844) has filed for Chapter 11 (Bankruptcy) , there are rounds of ECB having an emergency rate cut, UBS sneaking in to declare another $5B of writedowns, AIG seeking help from the Fed with a request of a $40B bridge loan after rejecting an offer by Flower to prevent themselves from joining the slaughterhouse where their CDs are currently gapping outwards, and it seems that the only few pieces of good news are probably that Merril had a merger with BOA, as well as a consortium of global banks have put together a $70B fund to facilitate liduidity and an orderly resolution between Lehman and their counterparties. ECB also joined in with $30B to curb liquidity woes as well.  In my opinion, it seems like an obvious trend that all Fed Governors are challenged ...