每日市场点评 --- February 29, 2008

Bears are back in the driver’s seat. All three major indices tumbled more than 2.5% for the day. For the month, the market lost around 3.5%, extending the loss to a fourth month. Unlike previous few days, the economic news was actually not all negative today. Both Personal Income and Personal Spending for January came higher than expected. The Core PCE inflation, meanwhile, came in line with expectation. Michigan Consumer Sentiment was revised higher. The only negative news again came from the manufacturing sector. The Chicago PMI was 44.5 vs. 49.5 expected. However, it shouldn’t be too surprising given that several other regions have already reported weak manufacturing activities. Certainly, this doesn’t bode well for the national ISM report on Monday.

There is no place to hide in today’s trading. All 10 major sectors dropped more than 1%. Financials were hit particularly hard following a disappointing earning report from AIG and UBS estimating that total write-downs in the industry can top $600 billion. Treasuries rallied sharply and the yield in the 10-year note was 3.52%, down 29 bps during the week. Traders were increasingly betting that the Fed is going to lower the Fed fund rate by 75 bps at its next meeting and the odds of such a cut are currently more than 50%. The US dollar dropped to a 3-year low against the Yen while the price of gold closed at another record high. The CRB index changed little today but for the month it gained more than 11%. The VIX index jumped more than 12% today but at 26.54, it is still not high enough to trigger a panic-selling rally. Indeed, we may see higher VIX readings in the days ahead.