Sub-prime fears return

June 28th, 2007

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Back in March this year, in Complacency! Market shrugging off sub-prime concerns, we criticized one financial news commentator, who was a prime example of the market’s complacency on the unfolding sub-prime problem. By now, you would have read about the crisis at Bear Stearns, which had to fork out billions of dollars to bail out some of its hedge funds that defaulted on debt securities going bad due to the sub-prime crisis in the US (see How did the US sub-prime lenders get into trouble?). Perhaps there are more hedge funds waiting to implode from the same malaise? That is why the market is feeling edgy lately.

We believe there will be more volatility in the days to come.