Stocks sink on DC chaos

Yahoo's headline: "Bush Scrambles to Save $700B Bailout Plan" pretty much tells the story. Last night talks in DC broke off a little before midnight. The Dow Jones futures were down 134 at that point, only to sink further in the next hour. Typically moves in pre-trading are only a couple points one way or the other. With all the confusion today, Dow is down only 35, decliners over advancers 5-1 & NAZ is down 29. 13 Dow stocks are up with JP Morgan having the biggest gain, up 1.17. S&P 500 FINANCIALS INDEX should receive much of the goodwill from the legislation, is down 5½ to 271 (not that bad all things considered). The Dow Jones REIT Index is down only 2 to 246. Both financial indicators are taking the delays fairly well. The concept of proposing an alternative rescue plan spells a very big "uh-oh" for me. Goodwill in DC has a half life of a few hours, it's long gone by now.

GOP Conservatives Present Rescue Alternative- AP


Adding to Wall Street woes is the failure of Washington Mutual (WM) last night, hardly a big surprise. JP Morgan (JPM) will take them over making JP Morgan the largest mortgage holder in the country. There have been about a dozen bank failures so far this year, but none have had the wide impact that this one will. I imagine millions of depositors are scrambling to check on the safety of their deposits. US Treasury bonds are higher, but the 3.8% yield on the 10 year Treasury is hefty considering the attention being given for a flight to safety. Maybe the US treasury bond is rated a little lower down the scale when considering flight to safety these days.

•WaMu Is Seized, JPMorgan Buys Deposits in Biggest Failure of a U.S. Bank
•Wachovia, National City Tumble, Leading Banks Lower, After WaMu Is Seized
•Government Bonds Climb as Bailout Plan Stalls, Washington Mutual Collapses


While not a a front-burner story, oil is back down almost 3 to the 105s. The Alerian MLP index is down 8 (a very big number for the index) to 231. With all the confusion about the status of the bailout package, there is a modest flight to safety so gold is having another good day:

GCU08.CMX

..Gold Sep 08...

890.20...

12.50 (1.4%)

I like graphs but they don't have much meaning when all the attention is on DC and what will come out of the current confusion. They have a self imposed deadline of Sun PM, prior to opening of Asian markets. I believe they will come up with a plan by then but the question returns, what good it will do? I keep thinking about the definition of a committee, a camel is a horse designed by a committee. When $B are being tossed around in a hurry, that thought is scary!