Due to conflict of travel schedule, market comments will be omitted on Mar 31st and Apr 3rd.

The market rallied for the third straight session as all three major indexes gained at least 2.7%. There is growing optimism among investors that the worst of the financial crisis may be over. Similar optimism also occurred last November but it turned out to be an illusion. But at least we may see some stabilization in banking earnings from now on thanks to the FASB’s vote today to ease mark-to-market accounting rules for banks. The decision was largely expected following the Congress hearing on March 12th, the day that saw financials jump by more than 10%. Financials actually lagged for much of the session as some investors chose to take profits following the positive news. In another sign that investors may be willing to look past bad economic reports, today’s worse-than-expected weekly jobless claims didn’t dampen buying interests. Of course, tomorrow’s non-farm payroll report can be a real test. 
Let’s take a look at the three key indicators: 1. VIX: closed at 42.04 compared to 42.28 yesterday; 2. The euro/yen cross: closed at 134 compared to 131 yesterday; 3. The TED spread: closed at 98 bps compared to 97 bps yesterday.
All 10 major sectors locked a gain for the second straight session led by consumer cyclical and transportation. The CRB commodity index jumped 3.9%. The US dollar was lower against most major currencies. Treasuries retreated as funds moved into risky asset classes. The three-month US LIBOR dropped 1 bps to 117 bps. The VIX index was little changed. The market breath was positive on both NYSE and Nasdaq. The volume was on the heavy side.

The market kicked off the second quarter in a positive note. The Dow gained 2% after posting a loss of 1168 points of 13.3% during the first quarter. The market opened sharply lower following Obama’s comments that bankruptcy might be the best option for the two troubled automakers. But the fact that all three major indexes reversed to the upside showed that investors have already accepted the possibility of bankruptcy filing from the two auto makers. In other words, one big uncertainty has been removed. In addition, it seems investors start to take a forward-looking stance towards the housing market. Yesterday, the S&P Case/Shiller housing index showed a large-than-expected drop with year-over-year price declining of 19%. However, investors shrugged off the negative news. Today, pending home sales showed an unexpected 2.1% increase in February and investors embraced the positive news. So far, we have had four pieces of positive or better-than-expected news from the housing front for the month of February. The other three include housing starts, existing homes sales and new home sales.
Let’s take a look at the three key indicators: 1. VIX: closed at 42.28 compared to 44.14 yesterday; 2. The euro/yen cross: closed at 131 compared to 131 yesterday; 3. The TED spread: closed at 97 bps compared to 99 bps yesterday.
All 10 major sectors finished the session higher led by consumer cyclical and basic material. The CRB commodity index dropped 1.2%. The US dollar was lower against most major currencies. Treasuries were little changed. The three-month US LIBOR dropped 1 bps to 118 bps. The VIX index dropped 2 points. The market breath was positive on both NYSE and Nasdaq. The volume was neutral.

Due to conflict of travel schedule, market comments will be omitted on Mar 31st and Apr 3rd.

A new wave of bad news sent the market sharply lower on Monday. The S&P 500 has lost over 5% during the past two sessions. Some of the biggest concerns among investors re-emerged today. Start with the troubled auto-makers. Obama administration rejected GM and Chrysler’s recovery plans and forced GM CEO Rick Wagoner to resign. GM is given another 60 days to develop a final plan while Chrysler is seen not viable of surviving on its own and is given 30 days to complete a partnership with Italy’s Fiat SpA. The administration said that “a structured bankruptcy process – if needed here – would be a tool to make it easier for General Motors and Chrysler to clear away old liabilities so they can get on a path to success while they keep making cars and providing jobs in our economy.” Based on the statement above, it seems Chapter 11 bankruptcy would be used if necessary. Many airline firms have used Chapter 11 protection in the past few years to get rid of old debt so they can restart from a leaner position.
Investors also get more negative news from the financial sector. Comments from Treasury Secretary Timothy Geithner that some banks will need large amounts of assistance sent the group sharply lower in today’s trading. I stated last Friday that “I expect most banks if not all will pass the (stress) test” and that view is proved to be too optimistic. Clearly, Geithner made those comments based on the initial results of the stress tests. We are going to hear more about the stress tests in the next few weeks.
Let’s take a look at the three key indicators plus the iTraxx CDX composite index: 1. VIX: closed at 45.54 compared to 41.04 last Friday; 2. The euro/yen cross: closed at 130 compared to 130 last Friday; 3. The TED spread: closed at 109 bps compared to 110 bps last Friday; 4. iTraxx CDX composite spread: closed at 690 bps compared to 755 bps in the previous week. But following today’s negative news, the spread widened to 730 bps.
All 10 major sectors finished the session lower led by basic materials and financial. The CRB commodity index dropped 3.0%. The US dollar was higher against most major currencies. Treasuries rallied with the yield curve flattened. The three-month US LIBOR dropped 1 bps to 121 bps. The VIX index jumped over 4 points. The market breath was negative on both NYSE and Nasdaq. The volume was on the light side.