About 'commercial debt recovery'|... first courteously entertained, then arrested on a civil suit for debt and detained. The river settlements of Esopus and Albany ...
Fed's emergency infusion therapy had the gasping world markets jumping up from their beds. Asian and European markets rose by 4-9%. The Russian market went so ballistic that they had to stop trading. Back home, US government continued to keep the market alive with announcements of more rescue plans in the pipeline: With money market mutual funds starting to be threatened, the Treasury will earmark $50 billion to insure such funds for a fee. The Federal Reserve announced it will provide liquidity for the Asset Backed Commercial paper market. This was necessary to shore up the commercial paper market which saw $52.1 billion of its worth disappearing in recent weeks. SEC's temporary ban on shortselling includes nearly 800 financial firms. Now GE and many other non-financial companies also want to get into the bandwagon and their requests are likely to be conceded. Congress is planning to build a big repository for illiquid assets worth around $1 trillion - in effect a mammoth financial waste dump. Only God knows how these "toxic wastes" will be recycled and repackaged! Market was so euphoric from the government's steady support that the trade volume soared. Market indices: Dow went UP by 368.75 (3.2%) 11388.44 S&P 500 UP by 48.57 (3.9%) 1255.08 Nasdaq UP by 74.80 (3.3%) 2273.90 NYSE: Daily Voume: 2.9 bln A/D Ratio: 2857 stocks advanced while 408 declined. 52-week Hi/Lo: 183 stocks rose new Highs and 95 hit new Lows. Nasdaq: Daily Volume: 3.9 bln A/D Ratio: 2287 stocks advanced against 692 declined. 52-week Hi/Lo: 213 stocks topped new Highs and 123 broke down to new Lows. Oil is now firming up above $100, even momentarily hovered above $105, only to finish the session at $104.55. That was $6.67(6.8%) more than Thursday's close. Gold fell by -$31.30 (-3.6%) to 864.70. MARKET NEWS: Financials and energy stocks spearheaded the record surge in trading. Financials were especially buoyed by the government's step-fathering illiquid possessions and its ban on shortselling their stocks. Morgan Stanley (MS) made a spectacular 21% advance and doubled in 48 hours. Merger talks are still taking place with Wachovia Bank (WB) and China Investment Corporation (CIC). UBS (UBS), though buffeted by subprime loans says it is sufficiently capitalized. That laid to rest rumors of its merger with Credit Suisse (CS). Despite recent problems, Citigroup (C) is reportedly considering a bid for troubled Washington Mutual (WM). Credit rating agencies are still flogging tired horses: Moody's placed bond insurers Ambac (ABK) and MBIA (MBI) on the review list for potential downgrade. And their stocks went down. As investors returned to risky stocks, technological stocks took a back seat. Dell (DELL) and Hewlett-Packard (HPQ) could not take advantage of today's surge. So also, consumer staple stocks like Colgate Palmolive (CG). COMPANY RESULTS: Oracle's (ORCL) earnings surpassed the expectations of the market while Cintas (CTAS) just missed the forecasts. Palm's (PALM) earnings were disappointing. Texas Instruments (TXN) increased its quarterly dividend by 10%. M&A: Cisco (CSCO) acquired Jabber, an open-source messaging and presence protocol used by Google Talk and Gizmo. ANALYSTS' RATINGS: The following stocks were upgraded: American Electric Power(AEP), Colfax (CFX), Constellation Energy (CEG), Cree (CREE), Diamond Management Tech (DTPI), FPL Group (FPL), Goldcorp (GG), KeyCorp (KEY), McAfee (MFE), Murphy Oil (MUR), Nova Biosource Fuels (NBF), Oracle (ORCL), Otter Tail Power (OTTR), Pacific Capital Bancorp (PCBC), Satyam Computer Svcs (SAY), United Therapeutics (UTHR) and US Physical Therapy (USPH) and Wilmington Trust (WL). Downgrades included: Accenture (ACN), American Greetings (AM), Biodel (BIOD), Cardinal Financial (CFNL), Cintas (CTAS), Cobiz Financial(COBZ), Cognizant Techno Solutions (CTSH), Concur Tech (CNQR), Constellation Energy (CEG), Digi International (DGII), Empire District Electric (EDE), Enterprises Financial Svcs (EFSC), First Niagara Financial (FNFG), Flagstone Reinsurance Holdings (FSR), Freightcar America (RAIL), Gibraltar Industries (ROCK), Host Hotels & Resorts (HST), Infosys Tech(INFY), GSI Commerce (GSIC), Kendle International (KNDL), Lear (LEA), Microsemi Corp (MSCC), Monmouth Real Estate (MNRTA), NICOR (GAS), OfficeMax (OMX), Provident Financial Svcs (PFS), Quest Energy Partners (QELP), RC2 Corp (RCRC), Royal Gold (RGLD), Sterling Financial Corp (STSA), Thomson Reuters (TRI), WD-40 Co (WDFC) and Yadkin Valley Financial (YAVY). Alan Greenspan, while supporting the government's emergency measures, says he would like the administration to get out of the system once the crisis is over. He does not support the short sales ban, though. Even with all the government's heroics and chivalry, what were the weekly scores of Indices? Dow is still lower than last weekend by -0.3% S&P 500 just made it by a mere 0.3% Nasdaq somewhat better by 0.6% Now with the world's "freest market" just surviving on the government's $900+ billion life support, how many more billions will be needed to transfer it to the recovery room? Freddie and Fannie bail out just managed to resuscitate some refinancing mortgage activities only. New house purchases have not picked up as expected! So Fed intends to purchase short-term debt obligations of both companies. Increased trading volumes were partly due to what the market call "Quadruple Witching" - stock index futures, stock index options, and stock options contracts expiring the same day in addition to the regular futures contracts. So do not be surprised if next week, the volumes go back to the 1-2 billion range. Treasury Secretary Paulson announced in a speech that further decisive action would be needed to restore confidence in the financial system. What is ludicrous is that this billion-dollar exercise would not have been necessary, had the CEOs and their subordinate cronies simply done their daily chores diligently. That included not creating paper instruments of dubious value like subprime loans. After all that was equivalent to a third party issuing paper documents on just the hopes and dreams that somebody else will pay off his debts owed to a second party. On a mundane level, I cannot make promises based on my neighbor's mortgage obligations to his bank because that is an act of cheating. Only that, when such crap was indulged in by big Wall Street firms, the same deception was accorded legality and respect instead of prison terms! Now those people are being elevated to ultimate sainthood with bailouts and junkyards for illiquid assets conveniently offered by the government. Yes, government is providing errant companies a back door escape to legally strike off illiquid and distressed assets from the balance sheets. With accounting for illiquid assets receiving favorable treatment, soon what Anderson did for Enron will not be a sin! It is doubtful whether credit rating agencies were doing their part promptly. Rather than issuing credit downgrades and warnings in the last minute, they could have given timely notifications in the initial stages of deterioration. That could have given adequate time to "conscientious" CEOs to correct their mistakes. Any way, credit worthiness cannot get lost in one day. What the credit rating agencies did during recent weeks was akin to lynching companies on poor financial health just to let the public know that they are performing their duties. What is the benefit of driving down the price of $3 stocks to penny land? Investors have already punished them and no financier will give them short-term loans due to undercapitalization. Where were the credit rating agencies when a $90 dollar stock like Lehman fell to $0.19 OVER A PERIOD OF 24 MONTHS? Lehman's liquidity problem also was deteriorating during those months, not just in the last week of its existence. |
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