News That Moved Tuesday's Market

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News That Moved the Market

New Quarter Starts Off With a Bang. Stocks jumped out of the gate Tuesday, as positive economic data and good news from a couple financials fueled a powerful short squeeze. Last night, Lehman (LEH, +17.8%) announced plans to offer $4 billion worth of convertible preferred shares to sure up its balance sheet. Though the initial reaction was negative, buyers took control when Lehman said it had enough demand in the offering to raise more than three times as much capital. Investors were impressed Lehman was able to generate that kind of demand in what is considered by most a challenging environment. Markets were further boosted by the March ISM Index coming in at 48.6, which was above expectations and last month's reading. Short sellers were on the run the whole day, allowing major indices to finish near their highs.

UBS Climbs After Massive Writedown. UBS (UBS, +14.6%) said Tuesday it expects to report a $19 billion writedown and a loss of $12 billion for the quarter. The bank's chairman, Marcel Ospel, will step down, and the company announced plans of an offering intended to raise $15 billion to replenish its reserves. This all seemingly sounds like bad news, but the market saw the moves as swift actions needed to turn the bank around. Deutsche Bank (DB, +4.2%) also reported $3.9 billion in writedowns for the quarter and added the markets remain "significantly more challenging."

Quick Tics: Gold dropped 3.7% as the U.S. Dollar showed strength…There is now an 80% the FOMC will cut only 25 basis points at its next meeting.

Tomorrow

Notable Earnings (Full List Here):
Best Buy (BBY) Before Open
Monsanto (MON) Before Open
CarMax (KMX) Before Open
Research In Motion (RIMM) After Close

Economic Events:
8:15 AM: ADP Employment
9:30 AM: Federal Reserve Chairman Ben Bernanke Speaks
10:00 AM: Factory Orders
10:30 AM: Crude Inventories

Comments

[Wisdom-Seeker:]

Roy, I generally appreciate the market analysis and commentary here, but I think this time you completely missed the most important news that moved the markets, which was the Treasury's input to the Senate hearings on Thursday. Treasury said it's backstopping the Fed's losses on the $30B "loan" made to JP Morgan to goose the Bear Stearns thing.

In other words, the U.S. Taxpayer is paying for any losses the Federal Reserve takes on the Bear Stearns "loan". Which is a no-recourse loan. So there's no reason for anyone to pay it back. That means the financial markets have just picked the taxpayer's pocket for a bailout of $100 for every man woman and child in the United States. And, this sets a whale of a precedent!

THE MARKET IS HAPPY BECAUSE THE TAXPAYERS ARE NOW ON THE HOOK FOR BAILING OUT THE BIG BAD BANKS. WOULDN'T YOU BE HAPPY IF YOU COULD KEEP ALL YOUR PROFITS, AND DUMP ALL YOUR HUGE LOSSES OFF ONTO THE TAXPAYERS?

By the way, this is blatantly unconstitutional - only the House of Representatives is allowed to decide Federal spending. Somehow Paulson and Bernanke and Bush have decided that they can spend taxpayer money "on the sly" as long as they make it look like a "loan".
This is IMPEACHABLE. But Congress needs a "spine transplant" from unhappy voters.

The citizens of this country should be ashamed of themselves if they don't protest this one. Or, if you'd like, just open up your wallet and send in your $100 checks. Per person. And be prepared to do it again and again as the dominos continue to fall...

Protest here: www.financialpetition....
Learn more here: market-ticker.denninge...

2008 Apr 01 07:43 PM

[SavCD:]

You are right, this was a straight short squeeze.

2008 Apr 01 10:46 PM

[Chris Marshall:]

I cannot understand how announcing a $12 Billion 1st Qtr loss can equate to a 14.6% rise in its value. Any reshaping of UBS may take years to come to fruition, and raising $15 Billion must have a diluting effect on its shares. I think that this type of strange behaviour is known as "grasping at straws", a sure sign of hope over substance.

2008 Apr 02 04:13 AM

[tiredtrader:]

i enjoyed "sure up." Didn't you mean "shore up?"

2008 Apr 02 10:05 AM

[User 171895:]

deep

2008 Apr 02 03:51 PM