Uh.... this market is getting to be pretty interesting. After a weekend that allowed the "bears" to calm down, it turns out that nothing was calm about this morning's open. In fact, the New York Stock Exchange implemented a rule to try to preemptively slowdown the panic that was set to occur at the open. Rule 48 is a trading rule that speeds up the morning's opening auction process. The Rule, which has only been issued a few times in the last 10 years, is implemented by the exchange if there is excessive volatility in the pre-open futures market and in foreign markets. At one point, the Dow was down 1,000 points but halved it's losses by the end of the first hour of trading. Did the implementation of the rule successfully curb the panic? Who knows - unfortunately, we don't see what happens if the rule isn't enforced. Perhaps it could've been a lot worse at the open although its hard to imagine something more than a 1,000 point drop in the first few minutes of trading.
On another note, if Hayek (1945) is right and the aggregate prices observed in markets signal something informative about the future, then we can expect some interesting economic times ahead. If I was a betting man, I wouldn't put too much money on a Fed rate hike in September...
No comments:
Post a Comment