-54% … punto più punto meno. Anche qui non si scherza!
Volkswagen AG more than doubled in Frankfurt trading as Porsche SE’s plan to achieve a 75 percent stake in the carmaker prompted short-sellers to purchase from a shrinking pool of stock to close their positions.
Volkswagen jumped 309.15 euros, or 147 percent, to 520 euros. The stock has more than tripled this year, valuing the Wolfsburg, Germany-based company at 145 billion euros ($181.9 billion). Investors including hedge funds may hold 8.67 billion euros in borrowed stock that they must buy and return, according to Bloomberg calculations based on estimates by London-based research firm Data Explorers.
Read the full story here.
How Could the CDS Market Affect Equity Markets?
If you only consider the movement of capital into the CDS market, then the two have no relationship. That is, a spike in the demand for protection on company ABC’s bonds should not, in and of itself, have any effect on the price of ABC’s stock. However, a spike in the demand for protection on ABC’s bonds will lead to a spike in the price for such protection. Equity traders could view this spike in the price of protection as an indication of deterioration in ABC’s credit condition. This is the critical link. If equity traders ignore the spike as an aberration, they will not take action based on the spike.
In times of panic, particularly one rooted in a shortage of credit, it is rational for equity traders to view a spike in the price of protection of an entity’s debt as cause for concern. Therefore it would be rational to hedge or liquidate equity positions in that company. Thus, given an increase in the price of protection for ABC’s bonds in the context of today’s markets, we should expect ABC’s equity price to drop.
Read the full story here, … very intriguing.
For Stocks, Worst Single-Day Drop in Two Decades
House rejects US bail-out bill
Le origini del problema: The housing meltdown: Why did it happen in the United States?
The crisis enveloping global nancial markets since August 2007 was triggered by actual
and prospective credit losses on US mortgages. Was the United States just unlucky to have been the rst to experience a housing crisis? Or was it inherently more susceptible to one? I examine the limited international evidence available, to ask how the boom-bust cycle in the US housing market differed from elsewhere and what the underlying institutional drivers of these differences were. Compared with other countries, the United States seems to have: built up a larger overhang of excess housing supply; experienced a greater easing in mortgage lending standards; and ended up with a household sector more vulnerable to falling housing prices. Some of these outcomes seem to have been driven by tax, legal and regulatory systems that encouraged households to increase their leverage and permitted lenders to enable that development. Given the institutional background, it may have been that the US housing boom was always more likely to end badly than the booms elsewhere.