Oh, they didn't like that...
Mar. 16th, 2008 09:37 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
solarbirdDollar index through the floor at 70.872, ¥96.45, the Euro buys $1.59. These are monstrous moves.
J.P. Morgan is "buying" Bear Stearns for $2/share, down from $30 at Friday's close, or from $57(!) on Thursday. They're basically buying it for the cost of the Bear Stearns headquarters building. The Fed also cut the overnight rate by a quarter percent, expanded its lending pool again, and has guaranteed J.P.Morgan against losses via $30 billion in "financing" of Bear Stearns's "less liquid assets." What that means is as good your guess as mine. Marketwatch calls it an attempt to stop a global bank run on Monday. Does this take another $300 billion off the US equity markets, like Friday? I don't even know. But it's at least three billion on its own - Bear Stearns's stock value EOD Friday was $3.54B; this marks it to market at $234M, thats M, or a US$3.31B with a B loss. Before this deal, people were talking about buyouts for as little as $15/share - $2 wasn't really on the radar, somehow.
Not at all idly, Bear Stearns listed "notional/contract amounts of approximately $13.40 trillion and $8.74 trillion, respectively, of derivative financial instruments, of which $1.85 trillion and $1.25 trillion, respectively, were listed futures and option contracts." Nnnnnnnng.
Overnights on gold, oil are through the roof. Equities markets open globally (where it's Monday already) are tanking. Interest rates on the 10-year treasury are through the floor in response to panic buying. (Again, these are over-the-counter/overnights.) And it's going to be a festival of margin calls, and not just in North America, either, as the Times asks who is next?
(Meanwhile, more on the so very, very, very unfortunate timing of the Elliot Spitzer downfall. Karl Denninger reported on KFYI that there was cheering on the trading floor when the news broke.)
ETA: Rumours say that CNBC reported Hong Kong is not going to match the Fed rate cut, which implies delinking their currency from the US dollar. No good source, tho'.
ETA2: Spotted on Market Ticker forums: US losing confidence vote as investors flee:
J.P. Morgan is "buying" Bear Stearns for $2/share, down from $30 at Friday's close, or from $57(!) on Thursday. They're basically buying it for the cost of the Bear Stearns headquarters building. The Fed also cut the overnight rate by a quarter percent, expanded its lending pool again, and has guaranteed J.P.Morgan against losses via $30 billion in "financing" of Bear Stearns's "less liquid assets." What that means is as good your guess as mine. Marketwatch calls it an attempt to stop a global bank run on Monday. Does this take another $300 billion off the US equity markets, like Friday? I don't even know. But it's at least three billion on its own - Bear Stearns's stock value EOD Friday was $3.54B; this marks it to market at $234M, thats M, or a US$3.31B with a B loss. Before this deal, people were talking about buyouts for as little as $15/share - $2 wasn't really on the radar, somehow.
Not at all idly, Bear Stearns listed "notional/contract amounts of approximately $13.40 trillion and $8.74 trillion, respectively, of derivative financial instruments, of which $1.85 trillion and $1.25 trillion, respectively, were listed futures and option contracts." Nnnnnnnng.
Overnights on gold, oil are through the roof. Equities markets open globally (where it's Monday already) are tanking. Interest rates on the 10-year treasury are through the floor in response to panic buying. (Again, these are over-the-counter/overnights.) And it's going to be a festival of margin calls, and not just in North America, either, as the Times asks who is next?
(Meanwhile, more on the so very, very, very unfortunate timing of the Elliot Spitzer downfall. Karl Denninger reported on KFYI that there was cheering on the trading floor when the news broke.)
ETA: Rumours say that CNBC reported Hong Kong is not going to match the Fed rate cut, which implies delinking their currency from the US dollar. No good source, tho'.
ETA2: Spotted on Market Ticker forums: US losing confidence vote as investors flee:
Asian, Mid East and European investors stood aside at last week's auction of 10-year US Treasury notes. "It was a disaster," said Ray Attrill from 4castweb. "We may be close to the point where the uglier consequences of benign neglect towards the currency are revealed."ETA3: More Market Ticker, where they're up all night about this; who owned lots of Bear Stearns stock as of the end of the year(ish)? And whose shares have lost 98% of their value since the date of these figures? These guys did, that's who:
InstitutionalHopefully these people have been getting out. Because damn. Anyway, I'm going to bed now. I expect things should be explosive tomorrow, by which I mean AAAAAAAAAAAAAAAAAAAGH!! Good luck.
Barclays Global Investors, N.A. 3,676,161 $324,421,208 2.69% 9.16% Low
Barrow, Hanley, Mewhinney & Strauss... 11,485,058 $1,013,556,369 8.41% 28.61% Low
Cayne (James E) 5,838,906 $466,295,033 4.28% 13.16% Low
Legg Mason Capital Management, Inc. 5,732,794 $505,919,071 4.20% 14.28% Low
Lewis (Joseph) 11,053,463 $975,468,110 8.09% 27.53% Low
Private Capital Management LP 5,541,259 $489,016,107 4.06% 13.80% Low
State Street Global Advisors (US) 3,550,715 $313,350,599 2.60% 8.84% Low
Van Kampen Asset Management Inc. 4,482,424 $395,573,918 3.28% 11.17% Low
Vanguard Group, Inc. 3,149,691 $277,960,231 2.31% 7.85% Low
Wilmington Trust FSB (Boston) 27,336,556 $2,183,097,362 20.02% 61.62% Moderate
Mutual Funds:
American Beacon Large Cap Value Fun... 862,450 $97,974,320 0.63% 2.77% Income Value
Janus Twenty Fund 1,572,815 $178,671,784 1.15% 5.04% Growth
Legg Mason Value Trust, Inc. 2,300,000 $202,975,000 1.68% 5.73% Core Value
Nordea 1 Sicav - North American Val... 842,012 $117,881,680 0.62% 3.33% Core Value
Putnam Fund for Growth and Income F... 1,035,205 $91,356,841 0.76% 2.58% Yield
Van Kampen Comstock Fund 1,092,500 $97,942,625 0.80% 2.76% Deep Value
Van Kampen Equity & Income Fund 1,811,328 $162,385,555 1.33% 4.58% Deep Value
Van Kampen Growth & Income Fund 1,485,200 $133,148,180 1.09% 3.76% Core Value
Vanguard 500 Index Fund 1,096,625 $96,777,156 0.80% 2.73% Index
Vanguard Windsor II Fund 7,867,700 $694,324,525 5.76% 19.60% Income Value
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no subject
Date: 2008-03-17 05:34 am (UTC)John Quiggan notes that, comparing the price of JP Morgan's bailout to the value of Bear Stearn's HQ's real estate value alone, Bear is probably at least a billion dollars underwater (http://crookedtimber.org/2008/03/17/white-knights/) at this point in terms of real value. Outch!
no subject
Date: 2008-03-17 05:42 am (UTC)no subject
Date: 2008-03-17 06:37 am (UTC)no subject
Date: 2008-03-17 07:22 am (UTC)The rebound will be, in a word, interesting. Might I hazard to say that "nang nang nang" will be the order of the day on Monday's trading?
no subject
Date: 2008-03-18 09:58 am (UTC)no subject
Date: 2008-03-18 04:05 pm (UTC)All that said, clearly we're in a recession, and I do think it's going to be a pretty severe one, and I think it's going to be badly complicated by the oil situation. I think there's a very good chance we're looking at something like Japan in the 90s, only without savings, which makes things quite a bit worse for individuals generally. I think it's possible we could end up in a generalised demand collapse and outright depression (deflationary recession of -10% GDP or worse), but wow I hope not. I think it's not out of the question that in that situation we get to play the role of Great Britain and China gets to play the role of the US. The damage done to the US economy, reputation and standing, and long-term prospects over the last seven years has been truly immense, and I fear that some of that simply cannot be repaired. But I could be wrong.
no subject
Date: 2008-03-19 06:04 am (UTC)And it's difficult to say that we are not guilty for this situation.