As stock markets start the week they will begin to see the execution of various strategies conceived from brain storming sessions among industry leaders and their traders over the last few days in reaction to the new rules and limits for the markets. The trading industry which leveraged itself to new heights over the last eight years in order to increase profit margins will now have to adjust to a world of shrinking leverage ratios and the eventual overall flattening of volatility. Many hedge fund's models are now useless and will be under pressure to raise funds if they do not have risk sensitive strategies with high returns. Good luck.
In the long run, this large intervention will act much like large farm subsidies behave on commodity prices, it will support stock prices, especially those of well run companies, and it will flatten volatility. The peaks and valleys of stock prices will have long distances between them.
