Trading On The Ides: Breakdown Of A Meltdown

HedgeFundLIVE — In ancient Roman times the Ides of March referred to the 15th day of the month; a day marking the beginning of a new moon cycle and a celebration of Mars, the god of war.  The day was typically marked by a festive celebration including a military parade and the inevitable orgy or two. 

Despite its mirthful roots, our collective cultural consciousness will perpetually associate this day with the Bard’s famous word: beware.  Today, 2055 years after Caesar’s untimely demise, we find ourselves on another conspicuous March 15th.  The overnight trading session saw an explosion of volatility set off by the explosion of the Fukushima Daiichi nuclear complex. 

The Nikkei 225 index plunged 14% before closing down 10.6% while the broader Topix finished down 9.5%.  Around 10:00 p.m. US indices began to feel the aftershock.  Over the next two hours, the S&P futures broke through support at 1280, cascading 28 handles to settle at 1252. 

As the roof flew off Reactor #2, spewing radiation into the environment, Japanese PM Naoto Kan pleaded for calm amongst his people but warned that risk of further contamination remained “very high.”  The New York Times’ homepage featured an image with the caption “The worst nuclear accident since the Chernobyl explosion in 1986 is unfolding in Northern Japan at the Fukushima Daiichi nuclear power plant.  Three reactors have been critically damaged and one caught fire.” 

These explosions are likely attributable to the rapid rise in temperature of the nuclear fuel rods after the normal cooling system failed in the wake of the earthquake.  This caused the zirconium casing of the fuel rods to fail, releasing radioactive gasses into the environment.  The greatest fear still remains; the threat of a full meltdown.  This scenario occurs when the nuclear fuel pellets overheat to such extreme levels that they are able to escape the containment vessel and are exposed directly to our environment.

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http://www.hedgefundlive.com/blog/trading-on-the-ides-breakdown-of-a-meltdown

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