No Fear; JPM saves BSC with Help
Posted on March 18, 2008
Filed Under Market Speculator |
JPM getting an absolutely sweetheart deal to acquire BSC for $2 a share. Well, maybe not a steal at this point we have absolutely no idea the amount of liabilities BSC had including how levered it was to the Sub-Prime/CDO market. With that said, its own building is worth roughly a Billion dollars. I can only imagine the amount of losses BSC had on its books if JPM is only purchasing the Co. for $2 a share. Whether or not this deal is approved it highlights the amount of risk that is still currently hovering out there. Over leveraged firms are scrambling to deleverage themselves and avoid the BSC mess its in. However, is GS and LEH the next brokers to go? Both report earnings this morning and it shall be interesting to see if they reveal their exposure/risk which still remains.
VIX again failed to eclipse its previous high relative to its last low on 1/23. In addition to the VIX, we did not see the washout volume we’d normally see in a bottom. I did see many market participants on the forefront calling for a bottom because of the news out of BSC. We did not see our lows, I continue to put that stake into the ground. The likes of Citigroup (C), GS, LEH, MER still have room to fall. I would not be surprised if we continue to see more and more write-downs dealing with sub-prime/tier3 debt. We will ultimately get our bottom at some point but we have yet to get our capitulation, washout we need for a bottom.
Cash is King
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