This is the one year anniversary of the Bear Stearns disaster. Investors found out that a stock which had traded at 150 was being bought out for only 2. In the summer, Barney Frank reassured investors that Fannie Mae was sound even though the stock was 10 (shown over his shoulder). By the start of Sep, there were 2 political conventions & not a peep from anybody about a looming financial disaster. Mid Sep arrived & Lehman went. Now the pols caught on, there was a huge disaster out there. Enormous players such as Fannie Mae, Freddie Mac, AIG, etc. have been marginalized since then.
On Mar 16 (really Mar 14 close), Dow was 11,951 & the Alerian MLP Index was 275. The Alerian MLP Index lost a third while Dow is down almost 40%. Today, Dow is up 114 while NAZ is only even. Advancers lead decliners 3-1. Market strength comes from hopes that this week the Treasury will announce useful plans to fix the broken banking system. S&P 500 FINANCIALS INDEX is up 5, following last week's big rally. The only 1+ gainer in the Dow is Procter & Gamble (PG), however the very low priced financials have large percentage gains. Citi (C) shot up past 2.
The Alerian MLP Index is up 3. Junk bond funds are stronger but the Dow Jones REIT Inex pulled back 2 after last week's very large rally. Oil dropped $2 in Asian trading last night but recovered so that's it's only down 1. Oil bulls were unhappy that this weekend OPEC did not set another production cut, although enforcing existed quotas could reduce shipments by almost 1M barrels a day.
Industrial output in the US fell in Feb for the 4th consecutive month. Production fell to 67.4, the lowest level since record keeping began in 1948. Auto companies increased production in Feb, but that was off deeply depressed levels in the prior month. By way of comparison, the low in the recession of the early 80s was 70.9.
•U.S. Industrial Output Slides as Export, Auto Slumps Hit Broader Economy
AIG is learning what it's like to have the gov as its biggest stockholder. It's under fire for throwing bailout money around. Much of it went to foreign banks. $Ms was paid in bonuses to the guys who brought about this mess, that's not playing well. Can you spell "embarrassing?" Wed they will testify to Congress, a job I wouldn't want to have.
Ben Bernanke predicted the recession could end this year & recovery would begin next year. This is part of the administration's effort to bring out optimistic thoughts & stories.
Markets around the world were upbeat, with good gains. The Group of 20 meeting in UK over the weekend vowed to clean up toxic assets. But details are unclear not to mention efforts will vary from one country to the next. A lack of ultra dreary stories is bringing out buyers after last week's strong market.
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