http://money.cnn.com/news/newsfeeds/articles/djf500/200803162154DOWJONESDJONLINE000420_FORTUNE5.htm
In one of the most interesting and drastic unravellings in recent business history, Bear Stearns's board of directors has negotiated a full-on take-over by JP Morgan for a whopping $2/share (previous day close @$30/share and @$57/share the day before that), signaling in no uncertain terms that last week's billions in Bear's market value are gone for good.
In addition to the direct losses experienced by all carrying exposure to Bear, we now stand to witness a potential reevaluation of adjacent CDO-carrying financials as their multiples will necessarily be reconsidered with mounting concern for "run on the bank" scenarios and long-term solvency.
In the short term, Goldman has a narrow advantage in the financial playing field while Citi may be the next bulge-bracket under the gun.
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Artem
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2 comments:
Puff go the Billions, so sick. It will be interesting to see how this news affects the big financials tomorrow. On one hand, it is diturbing to see a major player like Bear Stearns collapse like this and will definetely put some doubt into overall health of the markets. However, on the other hand the Fed has shown a willingness to get involved and prevent a major collapse by securing Bear's portfolio and this may offer hope that more relief is ahead. Either way the S and P 500 should fall past the 1275 resistance level (since BSC will open significantly lower) and it will be interesting to see if the freefall continues, short the S and P 500 might be a profitable play if it opens below 1280 and continues dipping.
Just imagine shorting the BSC futures in August (that's a 1:3 leverage) why does no one tell me these things in advance
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