Manic Monday: Good New for Banks, Automakers

Finally, a Monday with some positive action and good news. How long has it been?

Three weeks? A month? It feels like a decade.

Mondays used to be known for their merger and acquisition announcements. Now, the news we start the trading week with is about bailouts, bankruptcies, and government intervention. I am glad to at least see some good news about the bailout today.

Early this morning, Neel Kashkari, filling the newly created position of Interim Assistant Secretary of Financial Stability, told Americans about the federal government’s latest plans to keep the country from falling further into economic instability. The news is not all that bad.

According to Kashkari, the rescue plan enacted over a week ago is finding a quick implementation. New employees are getting hired. Departments are being created. And the Treasury is busy working to start buying equity stakes in many of the nation’s banks. It even hired a few lawyers to help out.

Within a few days, we will undoubtedly hear about Washington’s first bank purchase of the crisis. It could be one of any number of banks across the nation, as the Treasury has nearly free reign to purchase shares of banking-related companies.

Watch the tape today

Already, values of financial stocks are increasing on the news that relief is just around the corner. With any luck, today’s news will allow Wall Street to stop the downward spiral and allow the markets to close higher than they did during the previous trading session. After seven days of red, some green will be a welcome sight.

One of the big names to watch today are Morgan Stanley (NYSE:MS) as Mitsubishi continues to stand by its original investment plans. Shares of the company were trampled last week as rumors of the deal’s demise spread across the Street.

Another sector worth watching is the nation’s domestic automakers. Ford (NYSE:F) and General Motors (NYSE:GM) are likely to add some points today as merger talks continue to widen.

Finally, watch National City Corp. (NYSE:NCC). Thanks to hugely bearish overshadowing, shares never rose last week on news of a potential merger. That will not be the case today. Expect a large pop in share price as investors re-think their position in this bank.

Last Friday’s extremely volatile trading activity indicates it is quite possible we hit the bottom of this precipitous plunge. We will know definitely in just a few days. No matter what, this is a good time to start putting shares of undervalued companies back into your portfolio.

Disclosure: none