DealBroken

The Federal Reserve left the fed funds rate unchanged at five and a quarter percent, noting that inflation rather than slower growth is still the primary concern. Bear Stearns agreed to pay up to $1.6 billion to bail out one of its troubled subprime mortgage loaded hedge funds. The SEC was said to have begun an inquiry into the funds’ troubles. The head of the Bear Stearns group with responsibility for the funds was replaced. UBS was formally charged by Massachusetts regulator with ‘hedge fund’ hotel charges. Blackstone’s share price slipped below Friday’s IPO price. Carl Icahn revealed that tried to short Blackstone’s stock.
The annual charity auction for lunch with Warren Buffett began. Rupert Murdoch reached a preliminary agreement with the board of Dow Jones & Company. Michael Moore was banned from the floor of the New York Stock Exchange. Robert Zoellick was named head of the World Bank. A court sentenced the founder of HealthSouth, Richard Scrushy, to almost seven years in prison. A phony departure email allegedly from a JP Morgan analyst made the rounds through Wall Street’s email inboxes.
A new phone from computer and music player maker Apple went on sale.

DealBroken: Last Week’s News Today

A pair of troubled hedge funds managed by Bear Stearns sent shivers of fear through Wall Street and the hedge fund community, and Bear was forced to bailout the funds. The Hollywood guy who ran Yahoo was forced out, leaving the company in the hands of one of its founders. The Supreme Court struck down a pair of lawsuits that threatened to impose tremendous liability on investment banks.
Morgan Stanley posted strong earnings. Bankers and others from corporate New York ran wild in Central park. The New York Public Library honored Stephen Schwarzman with a star-studded party. The board of Dow Jones took over the negotiations for a possible sale of the company to News Corp. This seems to have put an end to the plot by Pearson and General Electric to stifle competition from a combination of News Corp and General Electric to stifle competition from a combination of Dow Jones and News Corp, which has indicated it might launch a competitor to GE’s CNBC and beef up the foreign bureaus of the Wall Street Journal.
The immigration bill came back to life on Capitol Hill, and the Senate approved increased fuel-efficiency standards. A bill to tax partnership gains as income rather than capital gains was introduced in the House of Representatives. The Blackstone Group’s Pete Peterson went to a party for his daughter on the evening that the company he co-founded priced it’s IPO at $31 a share. The stock closed up 13% the next day after a higher opening.

Lehman Brothers continued its record as a contrary indicator on Wall Street, posting record profits in the same week that Goldman Sachs and Bear Stearns disappointed investors. Subprime worries worried. The Securities and Exchange Commission repealed rules restricting short-selling while a stock’s price is dropping. Yields’ on five-year Treasuries soared. The type of inflation that few on Wall Street watch rose precipitously, while the kind that is watched slowed. Stocks rallied on the news. The New York Stock Exchange and the National Association of Securities Dealers issued rules on a new technology involving some sort of ‘electronic communication.’
JP Morgan announced that it would return to lower Manhattan, building a tower on the site of the crumbling remains of the Deutsche Bank building. Jesse Jackson demanded that his friends on Wall Street get a sweeter taste of the Blackstone IPO. Capitol Hill lawmakers followed suit, introducing legislation to penalize private equity companies and hedge funds that go public.
The Bancroft family rejected a plan crafted by their own lawyers to protect the editorial independence of the Wall Street Journal. Rumors began to circulate that the owners of the Financial Times might bid for Dow Jones, perhaps in connection with General Electronic. The Chicago Mercantile Exchange increased its bid for the Chicago Board of Trade. TheStreet.com was forced to cancel the first week of its ‘Beat The Street’ online stock-picking contests after it learned that some contestants were using mysterious trading strategies that it said “could not be duplicated in the real world.”