Is the Catastrophe Right on Schedule?

Another down day on the markets.

It’s an interesting concurrence that the Dow has dropped 4.1% over the past two weeks (alongside most other major markets). Coinciding exactly with the introduction of new derivatives trading rules in the U.S.

True, the slide also comes as the Federal Reserve has started making anti-QE noises. But if you look at the details, the decline started before those announcements.

New trading rules requiring central clearing of interest rate and credit swaps came into effect on June 10. Over the next three days, the Dow fell 253 points. Then came the Fed statement. Since then, the Dow is down another 336 points.

It’s not definitive, but it is worth noting. We’ll know a lot more later in mid- to late July when financials from big derivatives traders like Goldman USA, Bank of America, Citibank and JP Morgan come out.

Let’s see what the market does leading up to those numbers.

Here’s to keeping an eye on the road,

Dave Forest / @piercepoints / Facebook

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