Monday, March 17, 2008

JPM-Bear deal shocks manager stocks (AMTD; BK; BSC; LM; STT)

From Pensions & Investments:
Listed money managers were among the hardest-hit stocks today as JPMorgan Chase’s weekend purchase of Bear Stearns Cos. for just $2 a share squashed the hopes of some market participants for a sustained market rebound anytime soon....MORE

From BusinessWeek:


UBS downgrades Lehman Brothers (LEH), Goldman Sachs (GS), TD AmeriTrade (AMTD), Bank of New York Mellon (BK), State Street (STT), and Invesco (IVZ) to neutral from buy. Analyst Glenn Schorr says the liquidity squeeze and de-leveraging in the capital markets is intense; he thinks the odds are high it will get worse.

Schorr thinks a combination of three things are needed to calm the storm: bids finally meet offers and assets begin to find a clearing price; the government directly or indirectly starts buying up mortgage securities; and the government quickly enacts a credible "bailout" plan that stems the source of the problem: home price depreciation.

But, Schorr notes if or when we get some government intervention, the capital markets will still be facing recession, very weak activity levels, questions about book value, future returns, leverage ratios, regulation, and new (lower) valuation ranges....MORE