Futures are down as Asia and then Europe opened down. Get ready to hear a lot more economic stimulus plans from many governments. The dollar is up, commodities are down roughly 2 percent, and the bond market is closed.
Elsewhere:
1) Sign of the times: American Express' application to become a bank holding company was approved by the Federal Reserve.
What does this mean? Several analysts noted that it means AmEx [AXP 22.97 -1.01 (-4.21%) ]is assuming that the funding difficulties everyone is experiencing will be longer and more protracted than many expected.
By becoming a bank holding company, they are trying to broaden their funding sources, and will gain greater access to capital under the current and any future government-sponsored programs. And they do need capital. In the next six months, AmEx will need $4 billion in net commercial paper and $7 billiion of long-term debt.
Now they can turn to the real issue: stemming the losses coming from their consumer credit card division.
2) Las Vegas Sands [LVS 5.20 -2.80 (-35%) ]reported earnings below expectations, more importantly several projects are being delayed to preserve capital, and they are about to announce a $2.1 b capital raise. MGM [MGM 11.38 -1.28 (-10.11%) ]and Las Vegas Sands down 7 percent pre-open.
3) Here is is the type of news we WANT to be seeing. Citigroup [C 10.93 -0.28 (-2.5%) ]is joining JP Morgan[JPM 36.44 0.03 (+0.08%) ] by offering mortgage refinancings. Reducing consumer debt burdens is a key part of getting the economy going; expect to see more of this in the very near future.
Citigroup to Rework Thousands of Mortgages
This will have long-term positive effects for a variety of reasons (reduced foreclosures, increased confidence, reworked mortgage terms could be favorable) and while it may not be moving the needle this morning, as time goes on this news has a greater effect that its being given credit for this morning.
4) REITS. Lots of discussion on the Street yesterday about the fallout from the Circuit City bankruptcy, believed to be the latest of several bankruptcies coming. Impact on the REITs was profound, with many mall REITs down ten percent or more.
Credit Spreads
Pros Say: Currency Trends in Reverse
Credit Crunch Timeline
It's not just poor fundamentals killing REITs: they are experiencing higher capital costs as well. Interest rates are higher, the underwriting criteria has become much stricter, and loan-to-value ratios are dropping. It means that a lot of companies are going to de-leverage.
Speaking of funding difficulties: the Yellowstone Club, an exclusive mountain retreat in Montana which boasts former VP Dan Quayle and Bill Gates among its members, filed for bankruptcy Monday because they could not secure new financing.
Showing posts with label JPMorgan Chase. Show all posts
Showing posts with label JPMorgan Chase. Show all posts
Tuesday, November 11, 2008
Friday, September 26, 2008
Washington Mutual Fails
For WaMu the Government bailout will be too little too late. Its possible that JP Morgan Chase, however will may get a healthy slice of the $700 billion pie.
The Federal Deposit Insurance Corp. seized WaMu on Thursday, and then almost immediately sold off WaMu's banking assets to JPMorgan Chase & Co. for $1.9 billion. This is the second major purchase Chase has made this year; back in March Chase purchased Bear Sterens for nearly $1.5 billion.
WaMu, founded in 1889, now holds the dubious title of the largest bank to fail in US history. Its $307 billion in assets eclipse the $40 billion of Continental Illinois National Bank, which failed in 1984, and the $32 billion of IndyMac, which the government seized in July.
One positive is that the sale of WaMu's assets to JPMorgan Chase prevents the thrift's collapse from depleting the FDIC's insurance fund. But that detail is likely to give only marginal solace to Americans facing tighter lending and watching their stock portfolios plunge in the wake of the nation's most momentous financial crisis since the Great Depression.
WaMu "was under severe liquidity pressure," FDIC Chairman Sheila Bair told reporters in a conference call.
"For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks," Bair said in a statement. "For bank customers, it will be a seamless transition. There will be no interruption in services and bank customers should expect business as usual come Friday morning."
The bank's failue means that shareholders' equity in WaMu will be completely wiped out. The deal leaves private equity investors including the firm TPG Capital, which gave WaMu a cash infusion totaling $7 billion this spring, with nothing and no recourse.
JPMorgan Chase is in this to acquire assets, not liabilities. Chase said it was not acquiring any senior unsecured debt, subordinated debt, preferred stock of WaMu's banks, or any assets or liabilities of the holding company, Washington Mutual Inc. JPMorgan also said it will not take on the lawsuits facing the holding company. Basically they are just covering deposits and loans.
JPMorgan Chase, the second largest bank in America will not have more than 5,400 branches in 23 states. Its possible that the company will take advantage of economies of scale and close some competing branches, but Chase hopes to to close less than 10 percent of the two companies' branches.
The Federal Deposit Insurance Corp. seized WaMu on Thursday, and then almost immediately sold off WaMu's banking assets to JPMorgan Chase & Co. for $1.9 billion. This is the second major purchase Chase has made this year; back in March Chase purchased Bear Sterens for nearly $1.5 billion.
WaMu, founded in 1889, now holds the dubious title of the largest bank to fail in US history. Its $307 billion in assets eclipse the $40 billion of Continental Illinois National Bank, which failed in 1984, and the $32 billion of IndyMac, which the government seized in July.
One positive is that the sale of WaMu's assets to JPMorgan Chase prevents the thrift's collapse from depleting the FDIC's insurance fund. But that detail is likely to give only marginal solace to Americans facing tighter lending and watching their stock portfolios plunge in the wake of the nation's most momentous financial crisis since the Great Depression.
WaMu "was under severe liquidity pressure," FDIC Chairman Sheila Bair told reporters in a conference call.
"For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks," Bair said in a statement. "For bank customers, it will be a seamless transition. There will be no interruption in services and bank customers should expect business as usual come Friday morning."
The bank's failue means that shareholders' equity in WaMu will be completely wiped out. The deal leaves private equity investors including the firm TPG Capital, which gave WaMu a cash infusion totaling $7 billion this spring, with nothing and no recourse.
JPMorgan Chase is in this to acquire assets, not liabilities. Chase said it was not acquiring any senior unsecured debt, subordinated debt, preferred stock of WaMu's banks, or any assets or liabilities of the holding company, Washington Mutual Inc. JPMorgan also said it will not take on the lawsuits facing the holding company. Basically they are just covering deposits and loans.
JPMorgan Chase, the second largest bank in America will not have more than 5,400 branches in 23 states. Its possible that the company will take advantage of economies of scale and close some competing branches, but Chase hopes to to close less than 10 percent of the two companies' branches.
Monday, March 24, 2008
Morgan and the Big Bear
Let's start by saying $2 per share was absolutely absurd. Speculation along cannot account for a 60% discount, especially on governement insured debt.
NEW YORK (AP) -- JPMorgan Chase & Co. was discussing a deal that would increase fivefold its offer for Bear Stearns Cos. to $10 a share, The New York Times reported Monday.
The talks Sunday were an attempt to satisfy Bear Stearns stockholders upset over JPMorgan's offer of $2 a share for the struggling investment bank, the newspaper said on its Web site, citing people involved in the negotiations.
The original price for Bear Stearns was part of a deal struck last week at the urging of the Federal Reserve and Treasury Department.
The Fed, which would need to approve any change in the agreement, was balking at the new price, the Times said. Such opposition could postpone the new agreement or derail it entirely.
In an attempt to speed majority shareholder approval, Bears board was trying to authorize the sale of 39.5 percent of the firm to JPMorgan, the Times said. State law in Delaware, where the companies are incorporated, allows a company to sell up to 40 percent without shareholder approval.
A spokeswoman for JPMorgan declined to comment Sunday night, the Times said. A Bear Stearns representative could not be reached.
A spokesman for the Federal Reserve would not comment on the central banks involvement in the negotiations, but denied it had directed the original sale price, the newspaper said.
NEW YORK (AP) -- JPMorgan Chase & Co. was discussing a deal that would increase fivefold its offer for Bear Stearns Cos. to $10 a share, The New York Times reported Monday.
The talks Sunday were an attempt to satisfy Bear Stearns stockholders upset over JPMorgan's offer of $2 a share for the struggling investment bank, the newspaper said on its Web site, citing people involved in the negotiations.
The original price for Bear Stearns was part of a deal struck last week at the urging of the Federal Reserve and Treasury Department.
The Fed, which would need to approve any change in the agreement, was balking at the new price, the Times said. Such opposition could postpone the new agreement or derail it entirely.
In an attempt to speed majority shareholder approval, Bears board was trying to authorize the sale of 39.5 percent of the firm to JPMorgan, the Times said. State law in Delaware, where the companies are incorporated, allows a company to sell up to 40 percent without shareholder approval.
A spokeswoman for JPMorgan declined to comment Sunday night, the Times said. A Bear Stearns representative could not be reached.
A spokesman for the Federal Reserve would not comment on the central banks involvement in the negotiations, but denied it had directed the original sale price, the newspaper said.
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