ソラバドのほん: Life in the Convergence Zone

Oh, they didn't like that...
Dollar 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:

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:

Institutional
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

Hopefully 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.

Current Mood: O.o
Current Music: So Why? | Carbon Leaf