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Posted
Sep 16 2008, 03:15 PM
by
Andrew Horowitz
Rating:
Money Blog: Top Stocks Blog - MSN Money
 Since when do we rely on government to intervene in every case of a failing business? If anyone wonders why we have such a mess on our hands, look no further than our boneheaded government that has obviously forgotten its way. Think of this week's action within the financial markets as a result, not the cause of our problems.
AIG is in a battle for its very existence, Merrill has been absorbed and Lehman is bankrupt. And we're only part way through the week. What's next?
These days, many people are wondering what our government will do to stop the insanity. Yet, in a capitalistic society that relies on a free market system, we should only look to the government to guide and regulate against fraud and the manipulation of the system. Sometimes known as a laissez-faire philosophy, the government has a role, but it
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Posted
Sep 15 2008, 03:23 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
Lehman says it will go into Chapter 11. CEO Richard Fuld will almost certainly end up being loathed more than the heads of Drexel, Long-Term Capital Management, or any of the firms that failed in the S&L crisis. His mark as a symbol of Wall Street's monumental greed and stupidity will live long after he is gone.
Outside New York and the global financial community, Fuld has less name recognition than the giant panda, Yang Yang, in the Atlanta zoo.
More at issue than Fuld's legacy is that U.S. taxpayers will bear the burden of the failure of his company and other financial firms, not just in the next year but over time.
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Posted
Oct 24 2008, 06:39 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
No matter where economists look there is no evidence that a recession in the US, EU, and Asia is doing anything but deepening. The stock markets are the least of it. Some of the indexes in the largest countries are off 40% from their peaks reached a year ago. Banks are failing. In cases where the government has not stepped in some have disappeared and others have been merged into more healthy institutions. Healthy for now, that is.
The financial sector could easily lose several hundred thousand jobs in the US. New York City expects employment in the banking and brokerage sector to fall by 150,000. Marriages like the ones between Bear Stearns and JP Morgan and Wachovia (WB) and Wells Fargo will clearly put tens of thousands of people out of jobs. Goldman Sachs apparently will let 10% of its workers go.
The trouble has spread well beyond banks. Merck, Xerox, GM, and Chrysler just said they will push more poor souls out the door. Even a successful tech company such as Hewlett-Packard has taken significant numbers of people out of its workforce.
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Posted
Apr 04 2008, 07:55 PM
by
Charley Blaine
Rating:
Money Blog: Top Stocks Blog - MSN Money
There are enormous amounts of chatter about whether the markets have bottomed.
So, what's the evidence?
The market itself. Down as much as 18% in January from its Oct. 9, 2007 all-time closing high, the Dow Jones Industrial Average's loss has been trimmed to 11%. The Standard & Poor's 500 Index, briefly down 20% on March 17 from October in the turmoil over Bear Stearns, is now off 12.4% from its October peak. And the Nasdaq Composite Index's loss from a peak on Oct. 31 has shrunk from 25% on March 17 to 17% on Friday. OK, let's turn the thought around. The Dow is up 8% from its lows in January. The S&P 500 and the Nasdaq are both up 9% and 10% off their lows on March 17. Lastly, the S&P 500 moved above its 50-day moving average on March 24, briefly dipped under it and has moved above it again. Moreover, the moving average has started to rise for the first time since November.
The Federal Reserve. Ben Bernanke & Gang have made it clear they won't allow the financial system to collapse. That was the result the Fed and many on Wall Street had feared would happen if Bear Stearns had been forced to file for bankruptcy protection. Instead, Bear Stearns has agreed to be acquired by JPMorgan Chase
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Posted
Sep 15 2008, 03:38 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
Merrill Lynch is gone, sold to Bank of America for $44 billion. That's $29 a share, well below its 52-week high of $79, but above the $17 close on Friday.
Merrill would have opened below $10 -- the schizophenia caused by the current credit crisis is that great. The brokerage may well have had a balance sheet that could have allowed it to remain independent, but with Lehman gone, the doubt was spreading to the next company on the list. Short-sellers would have swamped over the company like leeches.
The word is that Paulson at the Treasury encouraged the deal. He didn't want another beggar at his door if the financial community wanted him to back
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Posted
Apr 14 2008, 02:58 PM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
Early indications from companies like Wachovia and General Electric show that the last half of March may have been tougher on bank earnings than Wall Street expects. Bloomberg recently reported that Citigroup, JP Morgan, and Wells Fargo could all miss consensus estimates. But by how much?
A look at the spread of Q1 estimates gives some hint about how far off actual numbers could be compared with investor expectations. At Citigroup, among 15 analysts polled by First Call the average EPS estimate is a loss of $.95. But, the lowest estimate is a loss of $2.24. At JP Morgan, the average figure from fourteen analysts is $.66, but the worst case is a loss of $.11. For Wells Fargo, twenty-three analysts have an average forecast of Q1 EPS at $.57, but the low number is $.45.
The huge discrepancy among the numbers should be troubling to shareholders because recent information would argue that share prices for most banks and brokerages may still be way too high.
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Posted
Jun 05 2008, 02:50 PM
by
Matt Koppenheffer
Rating:
Money Blog: Top Stocks Blog - MSN Money
Are we going to get an encore showing of "The Amazing Disappearing Investment Bank?" Now that Bear Stearns is no more, the banking bears and short sellers have turned their attention to fellow investment bank Lehman Brothers.
With the massive leverage ratios that the investment banks have propped themselves on, creditor confidence has become a prized asset -- maybe the prized asset. There was plenty that was going haywire over at Bear, but it ended up being a complete and rapid drying up
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Posted
Jun 26 2008, 01:18 AM
by
Jon Markman
Rating:
Money Blog: Top Stocks Blog - MSN Money
It’s easy to imagine that the 25 best-performing stocks in the S&P 500 Index this year are all oil and gas producers, and the 25 worst-performing stocks are all banks and brokers. Yet as we near the halfway mark in 2008, it turns out that there are quite a few surprises in the mix of best and worst.
For instance, the No. 1 stock in the benchmark index this year isn’t an oil producer, but a coal miner, Massey Energy. It’s up 155% so far, rising to $89 from $35 as coal prices have soared in the wake of booming demand in China and India. The No. 2 stock is actually a discount retailer, Big Lots. It’s up 100%, from $15 to $30, as investors speculate it will get a big share of tax-rebate money from low-income Americans.
Most of the rest of the next best 15 gainers
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Posted
Sep 16 2008, 11:07 AM
by
Kim Peterson
Rating:
Money Blog: Top Stocks Blog - MSN Money
A $36 Nalgene water bottle? Sure, if it has the words "Lehman Brothers" on it. That and other Lehman goodies are seeing brisk sales on eBay today.
"Dick Fuld told me this brand new, never used bottle is unbreakable, but he also said that about our mortgage business 2 months ago," writes the seller, who claims to have worked there for half of a career and bought stock at an average weighted price of $45. "Caveat Emptor, I guess."
Other collectible Lehman items for the bitterly nostalgic, or nostalgically bitter?
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Posted
Sep 05 2008, 07:05 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
If the markets are to take bond guru Bill Gross at his word, the world's financial markets could go through a cataclysmic failure. The head of fixed income fund operation Pimco says that a rapid sale of assets by banks, brokers, and hedge funds will cause the credit system to collapse. Almost all of these companies need cash and none of them wants to be left holding the bag if housing and commercial markets go to pieces.
The unusually eloquent Gross recently wrote "This rarely observed systematic debt liquidation is what confronts the U.S. and perhaps even the global financial system at the current time. Unchecked, it can turn a campfire into a forest fire, a mild asset bear market into a destructive financial tsunami."
Gross wants the US Treasury to move into the market and buy distressed assets to stop the knife from falling.
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