All's well that ends well
The week began on a good note as equity prices rose across the major market indexes. Economic news was not bad and in some cases even better than expected. But equity investors were weighed down by constant talk of war with Iraq. It certainly doesn't help that large companies are filing for bankruptcy right and left. On the heels of the UAL announcement, Conseco filed for Chapter 11 protection this week in the third largest bankruptcy in U.S. history. Seven of the 12 largest bankruptcies since 1980 have been filed in 2002. A sad statistic, isn't it?

By Friday, though, the market turned around again and managed to end the week on a positive note. A rebalancing of the S&P 500 as well as the NASDAQ forced many program traders to adjust their portfolios to get in line with the indexes. In addition, the old triple-witching day has turned into "quadruple-witching" day. Triple witching occurs quarterly with the expiration of stock options on individual stocks, stock-index futures, and index options. The first batch of single-stock futures contracts traded on regulated U.S. exchanges expired Friday, a new addition to the mix.

Safe haven
When equity prices are declining, chances are good that bond prices will rise. In fact, Treasury securities prices were generally on the upswing this week as yields fell. It isn't surprising that investors are turning to Treasury securities during this time of geopolitical trouble. But the upside is limited on price appreciation since the odds favor a rising interest rate environment in 2003 with faster economic growth.