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Posted
Jul 14 2008, 11:53 AM
by
Todd Harrison
Rating:
Hello from New York, where I don't much care how they "fix" Fannie Mae or Freddie Mac, but the related witch hunt to crack down on "rumor mongering" has me frothing at the mouth.
I expect the government to use whatever means they have at their disposal to ensure the smooth operations of the financial markets. You may approve or disapprove of the government behaving in such a manner but you can't deny that there is precedent for such manipulation (see: Long Term Capital, Bob Rubin's October '98 Bear Slaughter, Last August's manipulations, etc. et al).
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Posted
Mar 25 2008, 03:58 PM
by
Charley Blaine
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Al Copeland died on Sunday. You might not know the name. In Louisiana and certainly around New Orleans, he was about as well known as anybody both for the chicken you can get at Popeyes Famous Fried Chicken, the chain he started, and for his lavish, complicated and exuberant lifestyle.
He liked getting married. But all four of his marriages ended in divorce -- often acrimoniously. He liked Christmas. His house along Lake Pontchartrain in Kenner, La., was so lit up with lights at the holidays that airline pilots would use it to line up their approaches to the airport.
He liked fast cars and fast boats. He carried on a fun feud over the decor of one of his restaurants with no less than Anne Rice, the author of "Interview with the Vampire."
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Posted
Mar 20 2008, 12:09 AM
by
Jon Markman
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The big question on investors’ minds this week is whether the market has reached a major bottom following the Federal Reserve’s sensational attempt to rescue troubled brokerage Bear Stearns and slash short-term interest rates. It sure looked that way to many Tuesday after the big stock indexes soared by 4%. But Wednesday not so much, as stocks forfeited three-quarters of their gains.
So here’s the plain facts: You can only get a major bottom in stocks if the impulse to sell has been exhausted and if investors respond to lower prices with a powerful, sustained wave of buying. And the actions this week suggest that neither has occurred. Selling was clearly not exhausted Tuesday because sellers came roaring back Wednesday.
(Update: The market's gain on Thursday shows investors are hope the worst is over. But it hardly proves that stocks are cheap enough.)
The verdict is therefore clear: A major bottom in the market hasn't yet arrived. To understand why, consider what got folks excited Tuesday. The bailout of Bear Stearns might seem positive on the surface but it loses its allure when you stop and ponder the implications of the fact that the fifth-largest brokerage in the nation lost 95% of its value in a few weeks' time. And the three-quarter point cut in interest rates means the Fed believes the economy is in terrible shape. As if to put an exclamation point on this issue, on Wednesday Merrill Lynch, UBS and Lehman Brothers, all of whom had business models with similarities to Bear Stearns, were on the hot seat -- sinking in value by up to 11.5% and closing at lows. Investors thus collectively decided more shoes will drop, and the Fed cannot bail them all out at once.
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Posted
Mar 16 2008, 07:37 PM
by
Charley Blaine
Rating:
The proposed sale of Bear Stearns on Sunday to JPMorgan Chase for $2 a share, or $236 million, will keep litigation lawyers busy for years as enraged shareholders seek to recover anything from the disaster.
The losses from Bear Stearns' demise are shocking, so shocking that Asian and Australian stocks tumbled on the news. The dollar was fallling. Crude oil jumped over $111 a barrel, and European shares were expected to open lower as was the U.S. stock market.
From a peak price of $171.52 in January 2007, Bear Stearns managed to lose 98.8% of its peak market value of $20.2 billion in less than 15 months, all because the company bet everything that the housing market and the markets for securities backed by subprime mortgages wouldn't break. It did
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Posted
Nov 29 2007, 04:54 PM
by
Charley Blaine
The stock market may open cheerfully on Friday, courtesy of Federal Reserve Chairman Ben Bernanke.
Speaking in Charllotte, N.C., on Thursday night, the Fed boss told his audience that "the current stresses in financial markets make the uncertainty surrounding the outlook even greater than usual." And he added, "We at the Federal Reserve will have to remain exceptionally alert and flexible as we continue to assess how best to promote sustainable economic growth and price stability in the United States."
Already, financial commentators see those words, specially words like "alert" and "flexible" as strong suggestions that the central bank will be cutting rates again.
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You can read the Bernanke speech here. The pertinent parts are, conveniently, at the beginning of the speech.
Most of the players in the financial markets are absolutely convinced that the central bank will cut its key federal funds rate its Dec. 11 meeting. In fact, they see the fed funds rate, the rate that banks charge each other for overnight loans, falling from 4.5% now to less than 4.2% by January. The futures markets suggest the rate will drop to 3.5% by May.
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