8/1/08 (GM issues Sick Bag, Jobless Rise, Biogen proves insanity!)

Published: August 1, 2008, 9:38 am

Traders,Just when you thought we were going up we come crashing back down. The GDP numbers, and the late revisions (which will continue) is showing more contraction than we initially thought. However, with this massive volatility especially intra-day, the VIX and for that matter general options volatility has been fairly benign. The statistical volatility (actual movement in the underlying) on an intraday basis is running significantly higher than the implied volatility (options premium). Clearly no one is panicking in the market. A good thing but also maybe a sign that there is too much reliance on the Government to keep us from failing. And that has me concerned about the validity of the current market valuations. If we start looking at earnings (especially in the financial, building, auto, and airline sectors) things are not looking good but the protectionism in the Financial sector is more alarming - as we are not able to make a fair value call if they are

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