Bear Big’s Good Deal (NYP) If we’ve said it once, we’ve said it one billion times—it’s better to be fired by Bear Stearns than employed by it. There are a number of factors that led us to having two hundred t-shirts made up with this proverb printed across the back, the most basic being Carney’s drunken delusion that “it’d be cool,” but there’s also your own sense of self-worth, plus the fact that you can’t read about proxy access on the job to take into consideration. Another important point to think about if you’re a BSC employee on the fence about purposely trying to get yourself escorted from the building for good is that contrary to the writing on the 14th floor men’s room, James Cayne has not (yet) spent all the money set aside for severance packages on weed, and Bear is still keeping up with the Street’s grand tradition of rewarding failure handsomely. Former president Warren Spector, who was fired in August after someone told the firm it should at least pretend to be embarrassed about two collapsed hedge funds, and for being just as much of a bridge enthusiast/proponent of taking personal days during a crisis as Cayne, is being allowed to keep his $23 million vested stock position, $250,000 salary through the year’s end, a $207,000 retirement plan, and an “executive secretary” through December. He’ll also be guaranteed a pro-rated bonus.
Greenspan Has No `Regrets’ as Housing Slump Deepens (Bloomberg) Just in case you were wondering, Alan Greenspan has “no particular regrets” (about anything, ever) and said that the deepening slump in the U.S. housing market has nothing to do with his policies, or insistence on undermining every move Ben Bernanke makes (including this morning’s Jamba Juice. To wit: “Wow. Sure you want to do that? I’m sure you’re aware of how much sugar’s in that thing, right?”) He also stands by his previous statement about not giving a shit whether or not rich investors have seen their net worth go from $40 million to $5 million, and encourages everyone to go out and buy his book, on sale today. It makes a great stocking stuffer for those family members you hate but don’t yet have the moxie to kill (more on that later).
Norris Nuggets (Page Six)
FINALLY: “The Truth About Chuck Norris,” comes out next week. Author Ian Spector’s book has all the facts you already knew about CN (“The tears of Chuck Norris would supply enough liquidity to solve the credit crisis. Too bad he never cries.”), plus some new and exciting ones (“The day Citigroup became Shitigroup is the day Chuck Norris got fired from the firm for getting Maria Bartiromo pregnant on the corporate jet just by looking at her. It is not a coincidence.” “When Chuck Norris spends the day working out of Bear Stearns, he’s allowed to read Dealbreaker.com, and use James Cayne’s private bathroom on the 14th floor.)
Goldman aims to raise $6bn for hedge fund (Financial Times) Like most perfectionists unable to accept that there might be something they suck at, Goldman Sachs, troubled by some difficulties mastering the money-making component of the hedge fund business of late, has responded to truthful allegations of Global Alpha being down sixty percent not by retreating from the hedges but by raising $4-$6 billion for a brand new fund. The unnamed entity will be run by Raanan Agus, former head of the proprietary trading desk and Kenneth Eberts, former head of the US prop desk. To Goldman’s credit, it has had the sense to realize that it’s not so good with the quantitative methods, and will be focusing on picking shares. Also smart? The two year lock-up.
City Homicides Still Dropping, to Under 500 (NYT) You’re much more likely to get killed by someone you know than a stranger. Like, for instance, a former employee.
Productivity Days Off (CNBC) CNBC Senior Economics Reporter Steve Liesman thinks the day after Thanksgiving should be a national holiday, because we would be more productive and make more money the rest of the year. He takes off his tie and throws it down on the desk just to show how serious he is about this. And yet, there he is, in Englewood Cliffs, NJ, still working. I tried a similar tactic of video taping myself untying my right sneaker and throwing it against the wall, uploading it to a video iPod and sending it to Carney. As you can see, it worked wonders. Next year will be the year Steve and I don’t take no shit from anyone. Who’s with us?

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Financial stocks took a pounding today. The Amex Broker-Dealer Index was down 2.52%. The volume on the stocks of companies such as Merrill Lynch and Citigroup was enormous. Merrill Lynch ended up losing 7.9%. Citi sunk down another 2%. Goldman lost 4.4%. JP Morgan Chase: down 2.6%. Both Goldman and Merrill issued statements trying to reassure investors that stories about misdeeds or losses were untrue but this seems to have only made things worse.
After spending most of the day in the dumpster, the major indexes managed to climb back to close to where they started, which was a couple of ticks below where they began the week. Despite the late afternoon recovery, it’s worth noting that only the Nasdaq Composite Index has seen a net gain this month. he Dow Jones Industrial Average scampered up 27.23, or 0.2%, to 13595.10. The S&P 500 found itself up 1.21, or 0.08%, to 1509.65. The Nasdaq wandered upwards 15.55, or 0.56%, to 2810.38.
Despite the heavy trading in the financial stocks, overall volume was just slightly above the new norm. On the New York Stock Exchange, 1.7 billion shares found new owners.
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Trick or treat? The great Pumpkin came and went, and all the markets got was a push back to the lowest levels in over a week, and the biggest one day decline since October 19, the anniversary of Black Monday.
Stocks opened sharply lower. The major indexes started off the day at or close to the lowest point they reached yesterday before the announcement of the rate cut by the Federal Reserve. In fact, the duration rate cut’s boost to the stock market may be the shortest ever, and a sign that investors are finally taking seriously the perplexing array of threats to corporate prosperity and the broader economy.
And what started out ugly, stayed that way for most of the day. Volume started out heavy, and declined rapidly midday. Many investors seemed willing to sit this day out. But volume and downward velocity returned in the final hour of trading, pushing the indexes further down by half a percentage point to a full point. The Dow Jones Industrial average was down 3.62.14 by the end of the day, a loss of 2.6%. It closed at 13567.87. The Nasdaq Composite didn’t fare much better, dropping 64.29, or 2.25%, to 2794.83. The S&P got the worst of it, losing 40.94 points, or 2.64 percent, for a close at 1508.44. It was a bloodbath for the financials, which been moving upward this week. The Broker-Dealer index lost 4.88%.
There will be lots of talk about what changed between the final hours of trading yesterday and this morning. Our explanation remains: the aggregate buying and selling activity of investors, motivated by heterodox and often unarticulated strategies, produced the results. But folks who like a more narrative approach will likely blame the CIBC credit analysts note on Citigroup, Exxon-Mobile’s earning’s report and the Federal Reserve’s actions and statements.
Indeed, a lot of the talk today has been about the Federal Reserve. Some investors have reacted negatively to the news of the rate cut and language of further problems in the housing market. If the Fed thinks things are bad, maybe we should listen, they whisper while they punch in their sell orders. Others are more disappointed by the impression the Fed gave that this was the last rate cut the market was going to see for quiet awhile. Last call at the punch bowl, fellas.
The increasingly doubtful prospects of the Entity have also produced worries. If the US Treasury, JP Morgan, Citi and Bank of America can’t make the Entity work, maybe the market for the mortgage-backed credit instruments they wanted to sell into it is even worse than anyone imagines. Focus finally—belatedly—seems to have turned to the ABX bond index, which keeps falling. And there are whispers everywhere that some of the big Wall Street firms—especially, Merrill Lynch—may have actually underestimated their losses from the credit crunch.
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Stocks closed lower today on Fed uncertainty, even though the odds are pretty much stacked in favor of Ben Bernanke doing whatever the traders tell him to do. The DJIA was down 77.79 to 13792.47, the S&P 500 lost 9.97 to close at 1531.01, and the Nasdaq fell 0.73 to 2816.71. The firing of some guy at Merrill Lynch sent shares down 2.76% to $65.56.
Sadly, Carney got bumped on “Happy Hour,” but can probably be found at the bar where they tape the greatest show on cable TV for at least the next few hours, if anyone’s interested (Bull and Bear, in the Waldorf).
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Stocks nudged up a bit today. The major indexes gained as much as three-quarters of a percent each before declining a bit to close with gains nearer to one-half of a percent. The Dow Jones Industrial Average rose 63.56, or 0.5%, to 13870.26. The S&P 500 bloomed 5.70, or 0.4%, to 1540.98. The Nasdaq Composite Index, uhm, tuliped 13.25, or 0.5%, to 2817.44. The Amex Broker-Dealer Index saw even more action—both to the upside and the downside—today, and closed up 0.95%. On the New York Stock Exchange Monday, rising stocks beat decliners by 1.8:1.3. Volume declined a bit from recently elevated levels, so that just 1.2 billion shares traded hands electronic accounts.
After a brief dip downward following the opening bell, shares of Merrill mostly tracked the Broker-Dealer Index until around 1 PM, when they broke out to the upside. The stock closed with a gain of 2.01% for the day.
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The Dow Jones Industrial Average rose134.78, or 1%, to 13806.70. The S&P 500 added 20.88, or 1.4%, to 1535.28. The Nasdaq Composite Index shot up 53.33, or 1.9%, to 2804.19. One billion, four-hundred million shares traded hands on the New York Stock Exchange.
The Amex Broker-Dealer Index gained 3.41%, helped along by Merill Lynch’s 8.52% surge. Countrywide surged even higher after it’s executives held a two-and-half hour conference call to report earnings.
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Equities. After a slow start, the stock market worked its way into another day of high volume and volatility. Shares we up and down a bit in the morning and then took a downward tumble midday. The down and the S&P climbed almost back to flat in afternoon trading, with the Nasdaq once again falling behind. By the closing bell, the Dow was down 3.33, or 0.02%, to 13671.92. This was a slightly deeper drop than yesterday’s. The S&P fell 1.48, or 0.1%, to 1514.40. A slightly shallower drop than yesterday. The Nasdaq dropped 23.90, or 0.9%, to 2750.86. Also a shallower drop than yesterday. One billion, six hundred million shares traded hands on the New York Stock Exchange.
Bonds. Treasuries were all over the place today today. Yields on the two year t-bills fell to their lowest point in more than two years, but recovered to end down just 2/32s. The auction on the 5-year note generated relatively more interest than yesterday’s 2-year note auction had, but foreign central banks still seem to be avoiding US debt. Five-year Treasury notes were down 4/32 in price for a 4.03 percent yield. The 10-year note was unchanged for most of the day, and moved down 10/32 in after hours trading. The thirty year was down 18/32s.
Fed futures are showing an 86 percent chance of a quarter-percentage point to 4.5 percent at next week’s meeting. Yesterday some traders began betting on a 50 basis point cut, and the futures now indicate a 14 percent chance of the deeper cut.
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Equities: It was a whiplash day on the stock markets, as the major stock indexes made sharp reversals from gains in the first two days of trading this week and then rallied back to flat or nearly so in the last two hours of trading. “Trimming steep losses” and “well above the lows of the session” seem to be the favorite phrases of people who get paid to craft such sentences.
The Dow Jones Industrial Average was down a smidge, 0.98 points, or 0.01%, to close at 13675.25. The broader S&P 500-stock index fell further, 3.71 points, or 0.24%, to 1515.88. The Nasdaq Composite Index saw the nastiest day, losing 24.50, or 1.2%, to 2774.76. Volume climbed higher today as well, with the 1.59 million shares trading hands on the New York Stock Exchange. Sinkers beat climbers by a ratio of 2:1.2 on the NYSE.
Now a quick tour of some of the news that may or may not have driven part of today’s market action. Home resales declined, as did the median home price. People realized that there are no more Harry Potter books, and pushed Amazon prices lower. Merrill’s earnings showed it had the biggest losses from the subprime meltdown and credit crunch, gave more detailed disclosures of the losses than any other firm on Wall Street but didn’t satisfy investors with its conference call. The stock dropped dramatically after the call. Cablevision shareholders rejected a $10.6 billion offer from the Dolan family to take the company private. CEO James Dolan said he was “disappointed” by the vote. A Cablevision employees who spoke to DealBreaker on the condition of anonymity said “Yay!” After the closing bell, Microsoft admitted that it is investing $240 million for a minority stake in Facebook, which values the site at $15 billion.
Federal Reserve. With the last of the Wall Street earnings reports behind us, a lot of the babble bubbled about the depth and timing of a rate cut from the Federal Reserve. Nearly everyone seems to agree that another cut is coming because the credit, financial and housing markets still aren’t behaving the way the Federal Reserve would like them to. The questions are now how deep will the cut come. Some, like former Fed honcho Wayne Angell are calling for the Fed to cut rates down to as much as 3.5%. Others are speculating about a cut before next weeks meeting, either in the discount window or in the fed-funds target rate.
Bonds and Credit. U.S. Treasuries rallied, sending the two-year Treasury note’s yield to its lowest level since September 2005. The Treasury sold $20 billion of new two-year notes but the market didn’t seem to notice. Foreign central banks and other indirect bidders bought only about 22 percent of the sale. That’s below the average for such things, and a possible indication that demand for the debt of the US government is sinking with the dollar.
The two-year note traded up 5/32 in price for a yield of 3.73 percent . The 10-year note added 17/32, for a yield of 4.347%. The 30-year bond was up 27/32, yielding 4.646%.
The offering for TXU debt was said to be “massively oversubscribed” today. The underwriters succeeded in placing $7.5 billion of low-rated debt, making it the the largest U.S. junk bond sale ever.
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Stocks opened sharply higher this morning, took a brief dip two hours into the trading day, and the blazed right back up. The Nasdaq kept climbing for most of the day, while the Dow and the S&P took a brief dip as we went into the final hour of trading. But all three rallied strongly going into the closing bell. The Nasdaq Composite Index shot up 45.33, or 1.7%, to 2799.26. The Dow Jones Industrial Average climbed 109.26, or 0.81%, to 13676.23. The S&P 500-stock index climbed 13.26, or 0.88%, to 1519.59. Volume on the New York Stock Exchange was slightly lower than yesterday, with 1.31 billion shares trading hands. Rising stocks outnumbered decliners on the NYSE by a margin of 2 to 1.
The Amex Broker-Dealer Index tracked the movements of the broader indexes but slightly exaggerated both its upside and downside volatility. Early in the day the Index shot up more than 1.25%, declined with the broader markets, then began rallying around 2 PM. At the close it was up 1.28%.
Merrill Lynch reports its earnings tomorrow and spent much of the day in negative territory. It rallied along with brokerage brethren late in the day, however, and was up about 1% for the day. The rally was remarkable given the widespread rumors that Merrill losses from Merrill’s fixed income positions, particularly in CDOs, may twice as high as the already staggering $5.5 billion Merrill has already said it will take in third-quarter right downs. The bank was also contending with a Sanford Bernstein analyst’s note projecting that a pull-back in its fixed income business may cost the bank $1 billion in lost earnings next year.
It was a hot and heavy day for tech. RIMM shot up after breaking news of a deal that had the word China in it. Apple gained after last night earnings announcement. Amazon climbed all day, gaining 10% by the market close. Shortly afterwards, it reported that everyone who can read bought a Harry Potter book.
The Entity—the Super Siv that Citigroup, JP Morgan and Bank of America are putting together to rescue the lesser citizens of SIV-world—found some new friends today. A senior Fed official was quoted as saying that the widespread impression that the Fed was unimpressed with the Entity was mistaken, and that the feeling inside the Fed was that the Entity could help beleaguered financial markets. Meanwhile news reports said that Allianz SE’s Dresdner Bank is considering playing a role in the Entity.
Treasuries saw a mixed market today. Two-year Treasury notes were up 2/32 higher in price pushing the yield down to 3.84 percent yield from 3.86 percent late on Monday. Ten-year notes, were more or less flat, putting the yield at 4.41 percent yield, which is 1 basis point lower than late yesterday.
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“Beating expectations.”
“Defying expectations.”
That’s not just Apple’s earnings people are talking about. Those are two of the phrases that people are using to talk about today’s stock market performance. The early morning reports from markets around the world, indications from the futures markets and opening bell market movements all pointed toward another day of downward facing dog on the markets. And, instead, we ended up with the tree-pose. (At least, that’s how DealBreaker’s yoga guru Bess Levin described it in our after-market meeting.)
The Nasdaq was the clear leader. It dipped deep and early but staged a comeback after the first half-hour of trading. By 10 am, it had staged a rally above Friday’s close. After a brief pull-back into negative territory, it then went on to stay afloat for the rest of the day. Around 1 pm, it hit a high of around 2754, stayed just below that level for most of the day. It closed for a gain of gained 28.77, or 1.1%, to 2753.93.
The Dow lagged most of the day, only breaking into positive territory after noon. The index’s movements closely tracked the Nasdaq for the rest of the day, albeit with only slightly less than half of the upside. By the end of the day it gained 44.95, or 0.3%, to close at 13566.97. Eighteen of the 30 Down components were higher at the end of the day than they were when it started. The S&P 500 tracked the Dow almost step for step, ending the day with a gain of 5.70, or 0.4%, for a close at 1506.33.
At the end of the day, 1,786 stocks were showing green arrows on the New York Stock Exchange and 1,459 were showing red. Volume was high near the open and the close but lower through midday. The overall effect was that volume remained at the slightly elevated levels we’ve seen for the last couple of sessions (excluding Friday), with 1.4 billion share trading hands.
Bond yields tracked the movement of the equities indexes. Early in the day, Treasuries shot up, sending the yield on two-year notes to their lowest levels since, well, two years ago. Treasuries mostly ended lower, with a small gain for the 30-year bond.
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There’s always a bull market somewhere. We know that’s true because the guy on the television says it almost every night. But you would have been hard pressed to prove that point in today’s US equities markets.
The major indexes all went down, down, down into a burning ring of fire. The Dow Jones Industrial Average declined 366.94 to 13522.02. Every stock on the index was down. The S&P 500 dropped 39.45 to 1500.63. The Nasdaq Composite Index lost 74.15 to 2725.16. On the New York Stock Exchange Friday, volume kicked up to the highest levels in weeks, with 1.75 billion shares trading hands. 524 stocks traded on the NYSE rose while 2,789 fell.
It’s hard to overstate today’s losses. The Dow has now retreated to its lowest levels since the Fed cut rates one month and a day ago. Citigroup, Bank of American and JP Morgan Chase, the banks behind the Entity all declined rapidly. The Broker-Dealer index was down 3.7%. Not quite the worst day ever but close enough for horseshoes and hand-grenades. That Super Siv, by the way, is not having an easy time attracting investors. Even the Europeans are shying away.

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