Monthly Archives: March 2008

Why is Bear Stearns Trading at $5?

Bear Stearns shares are now trading at $5 apiece: clearly there’s a reasonably large constituency of investors who simply don’t believe that it’s going to be bought for $2 per share. This is definitely one of the weirder merger-arb situations … Continue reading

Posted in banking, stocks | 3 Comments

The Dow-S&P 500 Divergence

Financial sophisticates know that the Dow Jones Industrial Average is a bit of a joke: it’s only 30 stocks, and it’s not even an index. But for historical reasons it retains a grip on the public imagination that the S&P … Continue reading

Posted in stocks | Comments Off on The Dow-S&P 500 Divergence

JP Morgan-Bear Stearns: Good News for Architecture

In the April issue of Portfolio, Paul Smalera contrasts two new bank headquarters: those of Goldman Sachs, downtown, and Bank of America, in midtown. It’s no contest, really: Bank of America wins hands down. The best news on the bank-headquarters … Continue reading

Posted in architecture | 1 Comment

Bear Stearns: Let the Lawsuits Begin!

That was quick. This morning Paul Kedrosky found some Google ads by lawyers wanting to represent Bear Stearns shareholders; by this afternoon, BearStearnsInvestors.com is up and running. There doesn’t seem to be much hard information there about grounds for any … Continue reading

Posted in banking, law | Comments Off on Bear Stearns: Let the Lawsuits Begin!

Whither Wall Street’s Most Powerful Woman?

"Wall Street’s Most Powerful Woman" is the headline in the April issue of Portfolio, which has yet to hit newsstands. The question is whether she’ll still be there by the time most people pick up the magazine, for the woman … Continue reading

Posted in banking | Comments Off on Whither Wall Street’s Most Powerful Woman?

Lehman: Battered Hard

Now that European markets have closed, it seems that the US markets are taking a decided turn for the worse, with Lehman Brothers unsurprisingly leading the way down: it’s dropped more than 40% so far today and no one knows … Continue reading

Posted in banking, fiscal and monetary policy, stocks | Comments Off on Lehman: Battered Hard

Is the Bear Collapse Good for Clinton?

Might the Bear Stearns collapse be good for Hillary Clinton’s presidential campaign? John McIntyre thinks so: The very serious meltdown in the financial markets is likely to focus the country’s attention on the health, stability and future of the American … Continue reading

Posted in Politics | Comments Off on Is the Bear Collapse Good for Clinton?

Bear Karma

I just received an IM from a friend: I know some employees at Bear who are truly wiped out. They think it is revenge by the Fed for 1998. He’s talking about the rescue of Long Term Capital Management, which … Continue reading

Posted in banking | Comments Off on Bear Karma

Lehman Thinks Bank Bonds are Cheap

Fixed-income analyst Ashish Shah of Lehman Brothers has put out a report this morning urging investors to buy bank debt. "The Fed has finally intervened with overwhelming force," he writes; the regulatory authorities now understand that the time for half-measures … Continue reading

Posted in banking, bonds and loans | Comments Off on Lehman Thinks Bank Bonds are Cheap

Chart of the Day: Fed Lending

WCW has this chart, and says of it: Any time that a properly normalized series starts rivaling the freaking Depression, you have to worry. Worry? Yes, I’m worried. But not so much because banks are borrowing from the Fed again … Continue reading

Posted in fiscal and monetary policy | Comments Off on Chart of the Day: Fed Lending

Credit Markets: Very Cautious

John Jansen is of course the place to go for updates on the credit markets, and something very interesting seems to be happening right now, which is that nothing very interesting seems to be happening right now. Says Jansen: Many … Continue reading

Posted in bonds and loans | Comments Off on Credit Markets: Very Cautious

You Might Not Own Your Investment Securities

One of the weirder aspects of this financial crisis is that in most cases the amount of harm suffered by any given entity seems to have been directly proportional to the degree of financial sophistication that entity had. Structured products … Continue reading

Posted in investing | Comments Off on You Might Not Own Your Investment Securities

Market Open: So Far So Good

So that’s not nearly as bad as it might have been. As of 10:00, the S&P 500 is down 1.6%, and the Dow is down less than 1%. JP Morgan is up – that’s really good news. The financials are … Continue reading

Posted in banking, stocks | Comments Off on Market Open: So Far So Good

Is Bear Really Worth Only $2 Per Share?

Around the world today, people are looking at each other with a semi-glazed expression on their face, and saying something along the lines of "Dude. $2 a share." As Dennis Berman says, this is what they call on the Street … Continue reading

Posted in banking, stocks | Comments Off on Is Bear Really Worth Only $2 Per Share?

The Fed Needs Credit Confidence to Return. Today.

Today could be the single most important day in the history of this credit crunch. Up until now, every major Fed announcement has resulted in a market pop, at least for one day. If in the wake of $30 billion … Continue reading

Posted in bonds and loans, fiscal and monetary policy | Comments Off on The Fed Needs Credit Confidence to Return. Today.

Vikram Pandit Ousts Investment Banking Chief

Today is a great day to bury news if you’re an investment bank which isn’t directly caught up in the Bear Stearns collapse. After being forced to bail out his own alternative-investments unit, Vikram has now promoted the head of … Continue reading

Posted in banking | Comments Off on Vikram Pandit Ousts Investment Banking Chief

The Repo Market Crunch

Not very long ago, when the market in Fannie and Freddie debt went pear-shaped, I tried to look on the bright side, saying that at this point we’d pretty much run out of formerly-liquid securities which have now gotten credit-crunched: … Continue reading

Posted in bonds and loans | Comments Off on The Repo Market Crunch

Bad News for Bear Shareholders is Good News for the Markets

Two dollars per share is an astonishingly low price to pay for Bear Stearns: when I first saw it I honestly thought it was a misprint. If Bear is essentially worth nothing, that means other banks – Lehman seems to … Continue reading

Posted in banking, stocks | Comments Off on Bad News for Bear Shareholders is Good News for the Markets

The New Committee to Save the World

Ben Bernanke hasn’t caught very many lucky breaks of late, but the fact that Bear Stearns hit its liquidity crunch and got downgraded by all three ratings agencies on a Friday is probably one of them. The downgrade wasn’t welcome, … Continue reading

Posted in banking, fiscal and monetary policy | Comments Off on The New Committee to Save the World

Extra Credit, Weekend Edition

Nothing to Fear but Fearmongers Themselves: A Look at the Sovereign Wealth Fund Debate Official: Euroland GDP Passes U.S. Betting the Bank: Krugman on the desperation of Bernanke. Triple-A Trouble: Justin Fox on the ratings agencies. Common Wealth: Jeff Sachs … Continue reading

Posted in remainders | Comments Off on Extra Credit, Weekend Edition

How Systemically Important is Bear Stearns?

Nouriel Roubini thinks the world could absorb the failure of Bear Stearns: It is true that Bear is a large broker dealer; but its systemic importance is much smaller than that of much larger institutions. The world and financial market … Continue reading

Posted in banking | Comments Off on How Systemically Important is Bear Stearns?

Did the Fed’s Bear Bailout Prevent a Stock-Market Panic?

Willem Buiter explains today why he thinks the Bear bailout was unwarranted. I apologise for quoting at some length, but believe me, it’s a lot shorter than the 2,150-word blog entry: While the Fed, like any public institution, should support … Continue reading

Posted in banking, fiscal and monetary policy, stocks | Comments Off on Did the Fed’s Bear Bailout Prevent a Stock-Market Panic?

Whither Bear’s Chinese Billion?

Heidi Moore has the understatement of the day: CITIC has not yet closed its proposed investment in Bear, and today’s moves suggest that will be more difficult. Er, yes. Not least because at today’s closing price Citic’s proposed $1 billion … Continue reading

Posted in banking, stocks | Comments Off on Whither Bear’s Chinese Billion?

The Death of the Moral Hazard Play

Brad DeLong has a good point today: whatever happened to the moral hazard play? It’s an easy enough game: if you think a bank is going to get bailed out, you go long, safe in the knowledge that Ben Bernanke … Continue reading

Posted in banking, stocks | Comments Off on The Death of the Moral Hazard Play

How to Privatize Fannie and Freddie

Matt Cooper has a column in the April issue of Portfolio advocating the privatization of Fannie Mae. The big problem is how to do that: for all that the US government repeatedly reiterates that there is no federal guarantee, no … Continue reading

Posted in housing | Comments Off on How to Privatize Fannie and Freddie