Weekly Investmtent & Economic Recap: 4.4.08

April 7, 2008 | Leave a Comment

Attached/linked please find And That’s The Week That Was, the Brounes & Associates market/economic commentary for the week ended April 4, 2008.  So the books on the dismal 1st quarter 2008 are officially closed (and not soon enough) and investors seem intent on moving past the recent negativity. Though financial (more write-downs) and economic (weak housing, manufacturing, services, labor) news highlighted the week, the markets moved higher as investors looked at the carnage of the past three months and found some value in equities.  Bernanke stood up nicely to the heat as he was grilled by a finger-pointing Congress over his role in the JP Morgan/Bear Stearns transaction.  Paulson set out to reform the entire financial regulatory system, though he knows he will be long since retired (or back on Wall Street) before any of his proposals are approved/rejected.  The new quarter is off to the races and many investors believe the worst of the news is behind us.  Let’s hope the newfound optimism lasts (despite the  continued talks of recession.  Sorry, just a friendly reminder). 

Coming up in the week ahead:  Construction Spending (Tuesday), ISM - Manufacturing (Tuesday), ISM - Services (Thursday), Unemployment Rate (Friday), Nonfarm Payroll Additions (Friday)

Remember when it was an Open Market System?

March 18, 2008 | Leave a Comment

I’m extremely curious; why was JP Morgan/Chase granted the sole privilege of purchasing Bear Stearns for $2 per share.  Seems like a lot of this went on behind closed doors and occurred in such a quick manner that other market participants didn’t have a chance in Hades to respond.  While I haven’t fully crunched the numbers, it appears that their prime brokerage business alone would be worth $236 million at a low multiple, let alone any of the other profitable divisions and residual assets.  I’m pretty sure there are a lot of pissed off hedge fund managers that would have liked to been in on the bidding here.  And let’s not overlook the shareholders that got royally screwed here. 

A tip for the Fed: let the chips fall where they may.  The only cure for the mess that we’re in is to teach all the players involved some fiscal responsibility.

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