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Market Currents Thursday, September 25, 2008 Today's
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  • 10:26 PM Dallas Fed president Richard Fisher - often the lone dissenting voice on the FOMC - comes out against the $700B bailout plan. Comment!
  • 10:21 PM Text of the FDIC press release. Comment!
  • 10:17 PM Text of the JPM press release. Comment!
  • 10:11 PM JPMorgan Chase (JPM) also announced a new sale of $8 billion in common stock. Comment!
  • 10:07 PM With the acquisition of Washington Mutual (WM) assets, JPMorgan Chase (JPM) will have 5,400 offices with about $900 billion in deposits, the most of any U.S. bank. The banks will carry the Chase name, with complete integration expected by 2010. Comment!
  • 10:03 PM The AP reports that JPMorgan Chase (JPM)  will write down WM's loan portfolio by $31 billion. Comment!
  • 09:58 PM Details of the JPMorgan (JPM) WaMu (WM) takeover: JPM is paying to FDIC $1.9 billion for all WM's  banking operations, assets and financial contracts. The Office of Thrift Supervision shut down WaMu and named FDIC as the receiver. WaMu and its subsidiary, WaMu FSB, have $380B in assets and $188B in deposits. Comment!
  • 09:16 PM The FDIC has announced a conference call with chairman Sheila Barr at 9:30PM. Comment!
  • 08:03 PM Megafund TPG Capital, which invested $7 billion in Washington Mutual (WM) in April, stands to lose the $2 billion that its stock was still worth until recently. Comment!
  • 07:58 PM JP Morgan (JPM) is now reported to be buying all of WaMu's (WM) assets, including deposits and branches, for in excess of $1B. JPM is said now to be taking over all WaMu branches and opening them tomorrow.  Equity holders, including debt holders, are wiped out. [CNBC] Comment!
  • 07:30 PM JPMorgan is still reportedly buying WaMu - but it's from the FDIC. The Office of Thrift Supervision is said to be ready to move in to close WaMu tonight. This will be the largest bank failure in U.S. history. [CNBC] Comment!
  • 07:09 PM JP Morgan (JPM) is buying the deposits and some branches of Washington Mutual (WM) and is holding a conference call with investors at 9:15PM EDT. Reportedly the the government brokered the deal and may be assuming WaMu's liabilities. [CNBC] Comment!
  • 04:49 PM Seven better uses for $700B. Comment!
  • 04:43 PM Global financial turmoil proves free markets have failed, France's Sarkozy says. "The idea that the markets are always right is a mad one... Self-regulation to solve problems is over. Laissez-faire is over. The all-powerful market is over." Comment!
  • 04:28 PM Research In Motion (RIMM): Q2 EPS of $0.86 misses by $0.01. Revenue of $2.58B (+88%) in-line. Sees Q3 EPS of $0.89-0.97 vs. $0.98. Shares -20%. [PR] Comment!
  • 04:20 PM Fortune Magazine, 1994. "If ten years from now... you still can't keep these things in focus, then cheer! That will mean derivatives have not been forcibly brought to your attention by bad, bad news." They were a couple years off. Comment!
  • 04:11 PM Markets at close held onto some gains. Dow +1.82% to 11022.06. S&P +1.97% to 1209.18. Nasdaq +1.43% to 2186.57. Comment!
  • 04:03 PM Earnings previews for companies reporting after today's close: ACN, RIMM Comment!
  • 03:53 PM Dividend cuts at U.S. financials increases dramatically, S&P says. So far 27 of the S&P 500's 32 financial companies have reduced or suspended dividends. Comment!
  • 03:47 PM Despite signals Congress is about to lavish $25B on the auto industry, shares remain tepid. Not all bailouts are created equal, Barron's Bob O'Brien says: These seem to come with enough strings to make carmakers, and their investors, grumble. GM -3%. F -0.8%. Comment!
  • 03:39 PM Delta Air Lines (DAL +2.7%) shareholders approve Northwest Airlines (NWA +0.7%) merger by a ratio of 99:1. Comment!
  • 03:35 PM Ireland (ETF: IQE) becomes first Eurozone country to officially enter recession. Comment!
  • 03:29 PM With 1/2 hour to go, stocks push toward challenge of daily highs. Dow +2.57%. S&P +2.7%. Nasdaq +2.09%. Comment!
  • 03:24 PM GM (GM -3.2%): Tight credit continues to plague car sales. Comment!
  • 03:17 PM Bloomberg TV joins Google's (GOOG) TV Ads platform, alongside NBC (GE). Comment!
  • 03:12 PM Goldman estimates there are $1.15T in distressed assets around, which, assuming $0.70 on the dollar, means the $700B plan isn't far off. It notes, though, that its numbers could be too optimistic or too pessimistic. Maybe the latter. Comment!
  • 03:00 PM Dow laggards: GM -3%. AA -1.8%. DD -1.9%. Comment!
  • 02:59 PM Dow leaders: JPM +7.4%. GE +4.65%. BAC +4.4%. T +3.8%. PFE +3.7%. MSFT +3.4%. HD +3.3%. XOM +3.3%. IBM +3.2%. Comment!
  • 02:58 PM Crude +2.01% to $107.86. Gold -1.43% to $882.20. Comment!
  • 02:56 PM Heading into the final hour, gains are leaner but solid. Dow +1.85%. S&P +1.92%. Nasdaq +1.45%. Comment!
  • 02:55 PM Overproduction and swelling inventories could see prices for solar panels drop by 20%, analysts say, leading to short-term margin erosion. Affected producers may include SPWR, and STP. Comment!
  • 02:50 PM Freddie (FRE +5.2%) and Fannie (FNM +7%), which were up solidly, have dived since 2:10. Comment!
  • 02:31 PM "Jeffrey Immelt's (GE +4.15%) big concern these days can be summed up in three letters: AAA," DealBook says. Losing AAA could force institutional investors to unload G.E. bonds, and decimate its finance business, responsible for 40% of last year's profits. Comment!
  • 02:18 PM If the bailout was funded by a permanent tax increase, it wouldn't stand a chance, Bryan Caplan says. "The minimal public outcry, therefore, hinges on 'debt illusion' - the mistaken view that debts, unlike taxes, never really have to be paid." Comment!
  • 02:07 PM Rescue progress isn't doing much good for Washington Mutual (WM), -18.5% to $1.84. Comment!
  • 02:05 PM The proposed bill would approve $700B in installments, with $250B available immediately. Sen. Bob Corker thinks legislation will pass before Monday's open. Comment!
  • 02:00 PM Equities resume upward climb. Dow +2.49%. S&P +2.6%. Nasdaq +2.27%. Comment!
  • 01:59 PM Treasurys - buoyed by recent uncertainty - fall with signals a rescue bill is likely, if not imminent. 30-year -0.71%. 10-year -0.89%. 5-year -0.65%. 2-year -0.37%. Comment!
  • 01:56 PM The trend of improving credit fundamentals in emerging markets that has prevailed since 2003 appears to have run its course, S&P says. "We do not see much further upside to the overall credit standing of this asset class, and a pronounced downside is beginning to appear." Comment!
  • 01:36 PM If it wanted to, much-rumored suitor HSBC (HBC +3.7%) could easily go on a shopping spree, Deal Journal says. "It is the only major Western hemisphere bank whose shares haven’t lost any market value this year. In fact, the stock is up 3.7%." Comment!
  • 01:31 PM A 'fundamental' bipartisan agreement has been reached on principles for the $700B rescue plan, Sen. Chris Dodd says. Rep. Barney Frank says Congress is 'on track' to pass the plan. Comment!
  • 01:22 PM Ballmer (MSFT) says the U.S. financial crisis will hurt software demand - driven heavily by corporate spending. "It would be really imprudent for anybody to not have that in mind," he says. Almost 50% of U.S. firms have cut their budgets this year. Comment!
  • 01:05 PM Cash is king, Karsten Schroeder, CEO of Amplitude Capital says (video). In the short-term, equity markets are very volatile. She thinks 2009 will be a great year for private equity. Comment!
  • 12:56 PM Intriguing solution to the popular 'pay too much/pay too little' conundrum: Pay fair market value (not 'hold to maturity') for the assets - and separately inject capital into troubled banks by buying preferred shares. Comment!
  • 12:39 PM It seems as if GE's (GE) news never gets better, Doug McIntyre says. "If CEO Jeff Immelt’s tenure is marked by one thing - it is a hardy optimism followed by foolish revisions." Comment!
  • 12:24 PM A 2004 market-share war between S&P (MHP) and Moody's leads to lax standards as the pair scramble to please issuers. Oh for a teaspoon of foresight. Comment!
  • 12:10 PM By the end of 2009, about 100 U.S. banks with collective assets of more than $800B will fail, Christopher Whalen of Institutional Risk Analytics predicts. Disheartening, considering the FDIC has only $45B in its coffers. Comment!
  • 11:51 AM Bernanke suggests buying toxic assets at somewhere around hold to maturity - what banks think they'll be worth when the principal is recovered. But with many mortgages at or on the brink of default, maturity may be more painful than puberty. Comment!
  • 11:35 AM With weekly jobless claims now on the verge of topping 500K, the case for recession only gets stronger. Labor market conditions are clearly soft: expect a ninth consecutive decline in nonfarm payrolls. Comment!
  • 11:21 AM With total U.S. non-government debt of close to $40T, if only 10% of all outstanding loans default we're still looking at a $4T price tag. In time, some say, Paulson's $700B will look like duck soup. Comment!
  • 11:06 AM "Last night's address by President Bush got a chilly reception in Europe following his remarks that the current crisis has at least some of its roots in the massive influx of foreign investment that the U.S. was enjoying for many years." Comment!
  • 11:01 AM Schumer sees a bipartisan deal shaping up by this afternoon's White House summit. Comment!
  • 10:52 AM The notion that TARP marks the death of capitalism, as many apparently think, makes the questionable assumption what we've got now in some way resembles a free market, Accrued Interest says. Comment!
  • 10:37 AM Natural Gas inventories: +51 billion c/f vs. consensus of +61 bcf. NG futures +1.3%. Comment!
  • 10:32 AM Yahoo (YHOO) is jumping, +1.6%. Rumors of renewed talks with Microsoft (MSFT). Comment!
  • 10:23 AM Sector ETF weakness: Coal– KOL -1.1%, Gold Miners– GDX -0.8%, Basic Materials– IYM -0.6%. Comment!
  • 10:22 AM Sector ETF strength: Heating Oil– UHN +4.0%, Regional Banks– RKH +3.0%, Commercial Banks– KBE +2.9%, Insurance– KIE +2.9%, Retailers– RTH +2.9%. Comment!
  • 10:20 AM Markets shrug off weak housing data and continue their march higher. Dow now +2.19%. S&P +2.14%. Nasdaq +2.05%. Comment!
  • 10:15 AM Windows Mobile 7: Upcoming? Delayed? Non-existent? Whatever the case, Microsoft (MSFT +3.1%) needs to do something with its mobile platform - soon. Comment!
  • 10:14 AM August New Home Sales fell to a 17-year low of 460K/year vs. 505K consensus. The data shows few signs of a housing bottom. Comment!
  • 10:10 AM House and Senate Democrats agree on bailout bill - CNBC. Comment!
  • 10:01 AM Dow laggards: GE -2.2%, CAT -1.4%, AA -1.4%. Comment!
  • 10:00 AM Crude comeback: -0.26% to $105.48. Gold +0.04% to $895.20. Comment!
  • 10:00 AM Dow leaders: JPM +4.7%, BAC +2.8%, DIS +2.6%, MRK +2.5%. Comment!
  • 10:00 AM Stocks surge in early trading. Dow +1.54%. S&P +1.66%. Nasdaq +1.38%. Comment!
  • 09:59 AM Goodyear (GT +1.4%) goes ahead and draws $600M from its credit facility, part of which covers $360M frozen in the infamous Reserve Primary Fund. Shares, -45% over the past four months, are in freefall. Comment!
  • 09:46 AM Shareholders of Delta (DAL) and Northwest (NWA) will vote today on the proposed merger of the two airliners. A merger, which would create the world's second-largest airline, would still need Department of Justice approval. DAL +3.6%, NWA +0.1%. Comment!
  • 09:39 AM GE (GE -2.9%) maintains, for now, that it's only its hedge fund - its other businesses, it says, are doing fine. But "GE has finally admitted that it, too, gambled and lost," Henry Blodget writes. Now it's doing the same as its peers: frantically trying to recapitalize. Comment!
  • 09:38 AM Occidental Petroleum (OXY) will spend $1.25B to buy the 50% stake it doesn't already own in two oil-and-gas fields from Plains Exploration & Production (PXP). OXY +0.4%, PXP +1.0%. Comment!
  • 09:31 AM Indexes open substantially higher. Dow +0.78%. S&P +0.7%. Nasdaq +0.68%. Comment!
  • 09:30 AM Libor jumps 29 BPs to 3.77% - the biggest jump since 1999. The spread between Libor and the fed funds target rate is now the biggest on record. Comment!
  • 09:28 AM The TED spread - the difference between what banks and the Treasury pay to borrow money for three months - widens 14 BPs to 316. That's the most since at least 1984. It was 114 basis points a month ago. Comment!
  • 09:24 AM Futures have given back the lion's share of early gains, but still indicate a moderately higher open. Dow +0.24%. S&P +0.34%. Nasdaq +0.57%. Comment!
  • 09:18 AM J.C. Penney (JCP) -4% premarket. Merrill downgrades to Underperform; thinks lower pension income will cut into 2009 sales. Comment!
  • 09:07 AM Premarket losers: NMR -9%. SFD -8%. SAFM -7%. COF -7%. TSN -7%. GE -4%. JCP -4%. DRYS -3%. CHL -3%. Comment!
  • 09:06 AM Premarket gainers: AIG +11%. WB +6%. NKE +6%. LCC +6%. ABK +6%. AMR +6%. UBS +5%. RFMD +5%. DAL +5%. MT +5%. CAL +5%. Comment!
  • 09:04 AM Rep. Paul Kanjorski says tremendous progress is being made on the nearly-completed bailout bill - with only 'fine points' outstanding. He hopes lawmakers will work through the weekend to get it passed. Comment!
  • 08:50 AM Durable goods inventories, up 13 of the last 14 months, increased $2.4B (0.7%) to $338.5B - the highest level since at least 1992. Comment!
  • 08:43 AM Discover Financial Services (DFS): FQ3 EPS of $0.37 beats by $0.02. Revenue of $1.25B (+9.4%) vs. $918M. Shares +1.8% pre-market. [PR] Comment!
  • 08:39 AM Bernanke's Congressional testimony signals the Fed may be moving closer to an interest rate cut. Bernanke's comments indicate risks to U.S. economic growth are greater than policy makers previously thought. Comment!
  • 08:38 AM Futures look confused. They spiked up after a report the rescue bill was close to passage, but were confounded by the weaker-than-expected jobless and durable goods data. Dow +0.68%. S&P +0.75%. Nasdaq +0.9%. Comment!
  • 08:35 AM Durable Goods Orders fell 4.5% in August, much more than the -1.9% consensus. In July, they grew 0.8%. Ex-transportation, orders fell 3%, vs. -0.5% consensus (prior +0.1%). Comment!
  • 08:33 AM Initial jobless claims: 493,000 vs. 450,000 consensus - up 32K from last week (revised to 461K from 455K). Comment!
  • 08:29 AM Rep. Paul Kanjorski says the 'votes are there' in House and Senate for the rescue bill to pass. CNBC. Comment!
  • 08:25 AM Concerned about further tightening of credit markets and bank failures, some large companies, including General Motors (GM), are stocking up on cash by drawing down on credit lines they don't need. Comment!
  • 08:22 AM Google (GOOG) asks the FCC to deal with vacant TV channels before November's election. Google, Microsoft (MSFT), Dell (DELL) and other tech giants want to use the empty "white space" channels for high-speed wireless service. Comment!
  • 08:17 AM There's no quick end in sight for Boeing's (BA) machinist strike, going on three weeks and counting. Boeing and union representatives say no one is rushing back to the negotiating table, and they probably won't until both sides start to feel more of a pinch. Comment!
  • 08:12 AM Daimler (DAI) is in talks to sell its 19.9% stake in Chrysler to Cerberus Capital Management, which owns the other 80.1% of the U.S. carmaker. The move would allow Chrysler to pursue closer alliances with other car companies. DAI +4% pre-market. Comment!
  • 08:11 AM Chip designer Transmeta (TMTA) announces new settlement deals with Intel (INTC), and says it is looking to sell itself as the best way to maximize value for shareholders. TMTA +24% pre-market. Comment!
  • 08:06 AM The sale of Lehman's investment-management unit to private-equity - including Neuberger Berman - is being held up by wrangling over how to run the business and pay fund managers. Comment!
  • 07:56 AM There is an increased likelihood of a partial sale of WaMu (WM), Fitch says, leading to greater uncertainty for debt holders. WaMu's retail network is attractive, but its loan portfolio remains a concern to potential buyers. Comment!
  • 07:38 AM Rite Aid (RAD): Q2 EPS of -$0.27 misses by $0.12. Same-store sales +0.6%. Sees full-year EPS of -$0.56 to -$0.67 vs. -$0.51. [PR] Comment!
  • 07:37 AM The government's $25B loan package to the auto industry could be approved as early as this week, though automakers will face serious hurdles before they'll be able to put the money to use. Comment!
  • 07:34 AM Capital One Financial (COF) will sell 14M shares at $49. Wednesday's closing price was $52.49. Shares -7.5% pre-market. Comment!
  • 07:31 AM After being barraged with hundreds of emails claiming foul play, federal regulators open an investigation as to whether there's been manipulation at work in the silver market. (ETF: SLV) Comment!
  • 07:20 AM McCormick & Company (MKC): FQ3 EPS of $0.50 beats by $0.02. Revenue of $781.6M (+9.1%) in-line. [PR] Comment!
  • 07:07 AM WaMu (WM) approaches private-equity firms, including Carlyle Group and Blackstone Group, about a possible takeover as a long list of bank suitors thins out. WM +12.8% pre-market. Comment!
  • 07:06 AM 30-year bonds -0.37%. 10-year notes -0.26%. 5-year -0.24%. 2-year -0.15%. Comment!
  • 07:06 AM Crude -1.04% to $104.63. Gold -0.54% to $890.20. Comment!
  • 07:05 AM Futures have pared earlier gains following GE's weak outlook. Dow +0.36%. S&P +0.1%. Nasdaq +0.6%. Comment!
  • 07:03 AM In Europe, markets are mainly higher at midday. London -0.02%. Paris +0.9%. Frankfurt +0.8%. Comment!
  • 07:02 AM Shanghai was Asia's lone standout, +3.64% to 2,297. Nikkei -0.9% to 12,007. Hang Seng -0.15% to 18,934. BSE -1.11% to 13,541. Comment!
  • 07:01 AM China Petrochemical (SNP) announces a $1.8B bid for Tanganyika (TYK) to gain access to oil and natural gas operations in Syria and to boost its oil production by around 2%. Comment!
  • 06:53 AM South Korea's antitrust regulators grant eBay (EBAY) conditional approval to buy a controlling stake in Gmarket (GMKT), its primary rival in the country. Comment!
  • 06:50 AM GE (GE) lowers Q3 guidance, sending shares down 5%. Index futures also gap down. GE now sees Q3 EPS of $0.43-0.48 (vs. $0.52) due to "weakness and volatility in the financial services markets." For 2008, it sees EPS of $1.95-2.10 vs. $2.21. [PR] Comment!
  • 06:47 AM Oracle (ORCL) and Hewlett-Packard (HPQ) team up to sell corporate database hardware. The move will put pressure on smaller players Teradata (TDC) and Netezza (NZ). Comment!
  • 06:42 AM Online prediction market Intrade sees an 80% chance that Congress will approve a rescue bill by Sept. 30. Comment!
  • 06:34 AM GMAC's (GM) best hope for surviving the financial storm in one piece may be inclusion in the government's $700B rescue plan. The company is burning through cash, its bonds have fallen to a new low and its home-lending unit lost $1.9B in Q2. Comment!
  • 06:19 AM Bill Miller, fund manager at Legg Mason (LM), argues both shareholders and taxpayers will benefit if the government scales back its AIG (AIG) involvement. Comment!
  • 06:17 AM The dollar falls against the euro after two days of gains following Pres. Bush's statement that the U.S. could be facing "a long and painful" recession and on bets the Fed will cut interest rates next month. Comment!
  • 06:13 AM The SEC orders over two dozen hedge funds to hand over trading information as it intensifies its investigation of whether traders manipulated shares through rumor mongering. Comment!
  • 06:06 AM Five-year Treasury notes fall in anticipation of the government's $24B securities sale today. Money-market rates signal the reluctance of banks to lend funds is at a near-high. Comment!
  • 06:00 AM Volume on the CDS market shrank 12% in H1, the first contraction since surveying began in 2001, as traders tried to reduce risk exposure. Comment!
  • 05:55 AM European markets are trading up: London +0.6%. Paris +1.3%. Frankfurt +1.4%. Comment!
  • 05:48 AM After being deluged by companies trying to get on the no-short-sale list, U.K. regulators reject calls to widen the ban and restrict protection to companies primarily involved in financial services. Comment!
  • 05:35 AM German consumer confidence rose unexpectedly as falling oil prices left consumers with more money for food and clothing. Comment!
  • 05:30 AM Criticizing the U.S. response to the financial crisis, Germany's Finance Minister Peer Steinbrueck foretells, "the U.S. will lose its status as the superpower of the global financial system," to be replaced by a multi-polar system. Comment!
  • 05:25 AM August data shows Japan posted a trade deficit for the first time since November 1982 (excluding seasonally-slow Januarys). The Economy Minister blamed the trade deficit on U.S. economic troubles. Comment!
  • 04:53 AM Joining the global war against short sales, South Korea cracks down with tougher shorting rules. Comment!
  • 04:45 AM Trying to limit losses from troubled credit markets, Chinese banks curb approvals for interest-rate swap agreements with international financial firms. Comment!
  • 04:31 AM Asian nations holding U.S. Treasury bills must craft a deal to prevent panicked selling, says Yu Yongding.  Asian countries account for half of the $2.67T total held by foreign countries. Comment!
  • 04:21 AM Rumors of financial instability sparked a run on Bank of East Asia (BKEAY.PK), Hong Kong's first bank run in over a decade. Investors were somewhat calmed after government officials stood up for the bank and slammed the "malicious rumors."  Comment!
  • 04:11 AM Concerns about a delayed or weakened Treasury rescue plan push three-month money market rates in Singapore and Hong Kong above the levels of when Lehman declared bankruptcy and the government rescued AIG (AIG). Comment!
  • 02:38 AM Asian markets: Nikkei -0.9%. Hang Seng +0.6%. Shanghai +3.8%. BSE -1.0%. Comment!
  • 12:10 AM Notable earnings after Thursday's close: ACN, FINL, RIMM, TIBX Comment!
  • 12:05 AM Notable earnings before Thursday's open: DFS, MKC, RAD Comment!
  • 12:00 AM Thursday's economic calendar:
    8:30 Durable Goods Orders
    8:30 Jobless Claims
    10:00 New Home Sales
    10:35 EIA Natural Gas Report
    11:00 Kansas City Fed Mfg Survey
    12:00 PM Fed's Bernanke testifies in Congress
    4:30 PM Money Supply Comment!
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