U.S. stock futures point to rally on rescue hopes (Reuters)
At long last, a big rally is getting underway. S&P futures are soaring 6%, Dow Jones futures are up 4.9%, and Nasdaq futures are jumping 5.4%. Global markets are rallying (see next article). This is now a battle for the federal government to win or lose, depending on its next actions.
Is The Beating Over? (Forbes.com)
Here’s my weekly column on Asian markets at Forbes.com. It’s a what-to-buy/where-to-trade piece, but the upshot is that investors there expect a huge push in Japan tomorrow morning — and probably for the rest of the week.
World stock markets soar after last week’s rout (AP)
Overseas investors are chasing equity valuations after last week’s slump. There’s a general feeling out there now that we’re due for a bit of a rise after the recent selloff. Hong Kong surged 9.7%; Australia jumped 5%; in Britain the FTSE was up 5.6%, and in the rest of Europe indices were also up around 7%.

Morgan Stanley Climbs in Germany on Mitsubishi UFJ Discussions (Bloomberg)
The rumors coming out of Japan only look like good news for Morgan Stanley. Morgan ADRs in Frankfurt are up 31%, as talk has turned to that $9 billion cash-infusion from Mitsubishi looking ever more likely. Apparently, Mack the Knife is mulling the prospect of slashing the conversion price of preferred stock for Mitsubishi to around $20 – $25, from $31.25 a share. All the rumors about the Morgan deal not going last week through missed a key point: Mitsubishi needs this to stay competitive now that its competitors at home have all been feasting on the carcasses of defunct U.S. investment banks.

European Central Banks to Offer Unlimited Dollar Short-Term Funds (WSJ)
Is this a sign that policymakers have awoken from their slumber? Against all odds, it seems those G7 talks didn’t end in squabbling. Some investors seem to think we’re on the up from here now that everyone’s taken notice of the problems. The cost of insuring European corporate debt is off around 14%, after the fed promised “unlimited” dollar funding to three European central banks.
European Leaders Vow Bank Guarantees, Bid to Stop Financial Rot (Bloomberg)
… and European leaders have gone one further than G7 pledges. Euroland leaders are now saying they intend to guarantee new bank debt and prop up lenders via taxpayer money. With all this new liquidity, the thing to bear in mind here is that inflation, a key issue only weeks ago, has all but gone forgotten. While oil’s recent spiral helps take away some of the upward pressure on prices, that’s not to say that it has vanished altogether. Gold looks like a cheap hedge against the current wave of policy activity.

RBS, HBOS, Lloyds Get 37 Billion-Pound U.K. Bailout (Bloomberg)
Nationalization doesn’t go much further than this: Britain’s Prime Minister Gordon Brown now has a seat on the board of three of the country’s largest banks! “We are going through quite extraordinary circumstances the world over,” says Chancellor Alistair Darling. There’s been a lot of discussion over whether it’s right or wrong for the government to get so involved in the running of private companies, but the debate is futile. If nationalization of banks is what it takes to get us out of this mess, then that’s what it takes. Also, it’s not as if this is anything entirely new. Alexander Hamilton federalized individual states’ debt 300 years ago, in what was considered as one of the savviest moves in economic history. This is just an extension of the same process.
A Wave of Mergers Could Hit Banking Sector (CNBC.com)
One of Charlie Gasparino’s sources is saying that top execs at Citigroup, UBS, JP Morgan and Credit Suisse are all mulling the prospect of mergers, a flurry of which we may see in the coming weeks. I’ve heard the same talk going around among all the broker notes this morning. Gasparino’s source says “this will be a big week.”
China Trade Surplus Hits Record High (WSJ)
As the rest of the world’s governments scramble to find every dust-coated dollar bill lurking under the couch, China announced that its trade surplus has hit a record $29.3 billion. That’s mainly due to exports, which are up 21.5% on the year, to $136.4 billion. While that’s probably a ceiling for Chinese exports this year, it suggests that there’s not as much abating in demand for consumer goods as we previously supposed. Cut it whatever way you like, but the economic figures coming out in recent days just do not point to a third quarter recession. Specifically: do rising home resales and rising exports from the U.S.’s largest trading partner sound like consumption is slowing?
Report: GM, Chrysler held merger talks (Marketwatch)
The irony is, when heavy industry needs a way out, the deal always ends up much more complex than for any distressed multi-billion dollar investment bank. So here’s the skinny: Cerberus Capital, which owns 80% of Crysler, will arrange for GM to buy the automotive operations there. In return, GM will hand GMAC (GM’s financial services unit) its remaining 49% stake. Deep breath …
Icelandic Shoppers Splurge as Currency Woes Reduce Food Imports (Bloomberg)
Just in case things seem like they’ve finally turned … Icelanders are loading up on supplies at supermarkets, just in case the failed banking system there cuts them off from much-needed imports. Sales have doubled at Reykjavik’s largest shopping center. While probably a typical consumer over-reaction, it’s a stark reminder that we’re still on a cliff-edge for some time (or glacier-edge, as the case might be).