LIVE BLOGGING BEAR STEARNS: Bear Stearns Gets NY Fed, JP Morgan Bailout
LIVE BLOGGING BEAR STEARNS: (in reverse chronological order)
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5:00pm Final Price: $30 even, down -27.00 (-47.37%)
Total Volume: 186,986,843 (avg vol = ~12m)
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2:30: S&P Cuts Bear Stearns' Rating http://biz.yahoo.com/ap/080314/bear_stearns_ratings.html?.v=1
(Talk about late to the party!)
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2:15: 148 million shares in Bear Stearns
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12:54 "bridge" to other solutions including strategic alternatives (they are shopping themselves); Earnings moved up Monday
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12:40: Bear Stearns conf call is busy -- cant get on call -- 800-374-2412 -- Live stream anywhere?
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11:00: Whew! That was fun, but I have work to do -- live blogging over
Feel free to play in comments.
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10:59: CNBC reports that BSC is actively being shopped to JPM and others -- if they do get bought, you can expect huge layoffs.
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10:58: Shameless Self-promotion: Here was our most recent FusionIQ rank on Bear -- Sell @ $75 -- less than 2 weeks ago.
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10:57: Dunno why this reminds me of that, but there was a great episode of Coupling on BBC -- The Melty Man Cometh -- kinda reminds me of BSC today. (For more on Coupling, see this post)
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10:56: My office is 2 blocks from Bear's HQ. I should walk over and make a bid for their building, which is really nice.
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10:53: Bear hits new low $26.85 at 10am (late prints everywhere) -- BSC at $32
Markets recover somewhat -- Dow off 130
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10:49 Some of their directors have options to buy at $79.86
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10:48: I've always really like the Bear logo:
Here's the firm's about page
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10:46: Jim Rogers comments to Short all investment banks looks pretty spot on.
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10:44: So much for the recovery -- Dow off 200
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10:42: For you numerologists: Bear at $28, down $28 -- a two one for one split
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10:40: Groundhog Day: All we've done is guarantee 6 more months of this exact same thing. I hope I am alive when the post-mortem is written on this 50 years hence. I suspect it will be rather critical.
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10:38: When I whine about Socialism, this is EXACTLY what I am referring to. Instead of letting Bears Stearns get crushed, and then see the assets and talent pool get scooped up by someone else, we keep a wounded Bear on life support hanging around . . . My preference is creative destruction.
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10:36: Welcome to Bailout City!
Now you know: BSC is considered to big to fail.
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10:33: If you are wondering WTF a non-recourse, back-to-back financing is, pull up a chair:
JPM gets to go the the Discount Window and borrow all the greenbacks they want; Then they loan that to Bear. In the event that Bear defaults, the NY Fed cannot go back to recover from JPM -- hence, non-recourse.
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10:32 SEC statement Washington, D.C., March 14, 2008
The Securities and Exchange Commission today issued the following statement regarding The Bear Stearns Companies: “The Securities and Exchange Commission has been in close contact with the Department of the Treasury, the Federal Reserve, and the Federal Reserve Bank of New York during discussions concerning an agreement by J.P. Morgan Chase & Co. to provide a secured loan facility to The Bear Stearns Companies. We will continue to work closely together in a way that contributes to orderly and liquid markets.”
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10:32: Fed Statement (10:32 release time)
The Federal Reserve is monitoring market developments closely and will continue to provide liquidity as necessary to promote the orderly functioning of the financial system http://www.federalreserve.gov/newsevents/press/monetary/20080314a.htm
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10:31: Here's the JPM press reslease
JPMorgan Chase and Federal Reserve Bank of New York To Provide Financing To Bear Stearns
http://biz.yahoo.com/bw/080314/20080314005430.html?.v=1JPMorgan Chase & Co. (NYSE: JPM - News) announced that, in conjunction with the Federal Reserve Bank of New York, it has agreed to provide secured funding to Bear Stearns, as necessary, for an initial period of up to 28 days. Through its Discount Window, the Fed will provide non-recourse, back-to-back financing to JPMorgan Chase. Accordingly, JPMorgan Chase does not believe this transaction exposes its shareholders to any material risk. JPMorgan Chase is working closely with Bear Stearns on securing permanent financing or other alternatives for the company.
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10:29: Here's the link tot he 9:21 press release from Bear
Bear Stearns Agrees to Secured Loan Facility with JPMorgan Chase
http://biz.yahoo.com/bw/080314/20080314005441.html?.v=1
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10:26: Bear Stearns Press Release:
"We have tried to confront and dispel these rumors and parse fact from fiction," CEO Alan Schwartz said in a release. "Nevertheless, amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated. We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations."
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10:25: Dow off 100 -- things seem to be stabilizing -- what a wild ride
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10:20 Dow recovers . . . off 126
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10:15: No NY Fed statement released as of 10:15 yet . . .
Lots of good quotes on the Bear Stearns site -- too mean to post here, but go have some fun clicking around.
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10:12: Seemed to have stabilized at $35-36 -- At 45 minutes into trading, they have traded over 52 million shares
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10:11 No Federal Reserve Press Release on this? I better check the NY Fed site . . .
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10:08: Turns out Richard Bove was right -- the Fed action on Tuesday ABSOLUTELY WAS to rescue Bear Stearns . . .
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10:05: Bear = $34 -- $7 bucks off the 26.85 low
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10:03: Thought: Bear denied on CNBC they had any liquidity concern. (Bear Stearns CEO: No Liquidity Crisis for Firm). liars.
Financial
institutions have been issuing denials about the credit crunch for for
over 12 months now -- all of them full of shit. Once again, we learn you cannot trust managements to tell the truth -- especially in a crisis!
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10:00: Amazing freefall
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9:50: Dow off 300 points, Nasdaq off 58
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9:59: BSC = $30 Down $28 off 45%
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9:58: Bear down $26 -- off 40%
Dow off 200
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9:56: Down $18
Market is down 160 -- Goldman, others under pressure
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9:53: Down $20
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9:51: Down $19 -- its gonna be halted soon -- $38.50
As we discussed last night, liquidity concerns about Bear Stearns (BSC) have been validated.
The NY Federal Reserve Bank, and JP Morgan (JPM) have agreed to provide
secured funding to Bear and an initial period of up to 28 days. JPM is working
with Bear to secure permanent financing or other alternatives for
them.
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9:49: Bear is down 15, $42 and falling fast. 25 million shares traded in 20 minutes
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9:48: Doug Kass asks a good question: "If Bear Stearns (BSC) requires a temporary bailout, did the company's management fib in its recent CNBC interview?"
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Quick Headline roundup:
Yes, Bear Stearns Is Having Liquidity Issues
Wall Street Journal Bear Stearns Options Show Higher Odds Stock Headed for `Zero' (Bloomberg)
Bear admits its liquidity 'significantly deteriorated' (MarketWatch)
Bear Stearns In Crisis
Forbes
Bear Stearns gets Fed funding, shares plummet Guardian, UK
Investment banks down after Bear Stearns gets financing from ... CNNMoney.com
Market slides on Bear Stearns liquidity issues Reuters
Should Alan Schwartz Sell Bear Stearns? (WSJ)
Gold Futures Rise to Record $1009 on Bear Stearns Bailout (Bloomberg)
Bear Stearns shares plunge as it seeks emergency funding
Bear Stearns to Get Backing From J.P. Morgan, N.Y. Fed (WSJ)
Bear Stearns to Get Backing from J.P. Morgan, N.Y. Fed (Bloomberg)
Bear Stearns Stock Plunges Amid Risk Worries
Bear Stearns `Undermines Credibility of Issuers,' Pollack Says Bloomberg
Friday, March 14, 2008 | 09:41 AM | Permalink
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Comments
Ohhh...look at that domino...it's falling, falling, falling...
This bull is going to have to climb a wall of insolvency.
Posted by: American ZIRP | Mar 14, 2008 9:48:24 AM
As the Phorphet of Margin Calls, I must keep some level of confidentiality. But yes, I did pay a call on Bear Stearns...it wasn't pretty. A lot of crying and begging. Can't write more...I have a very busy schedule. Don't be fooled by JPM either...they have 20 Trillion in derivatives I'm going to look into.
Posted by: Dee Leverage | Mar 14, 2008 9:54:04 AM
Doug Kass asks a good question: "If Bear Stearns (BSC) requires a temporary bailout, did the company's management fib in its recent CNBC interview?"
umm, yes
Posted by: schaz | Mar 14, 2008 9:55:00 AM
Damn, PT Barnum was right.
Posted by: Joe Lewis | Mar 14, 2008 9:56:05 AM
To anyone bullish who thinks the financial system is secure, think twice. In a matter of seconds, the futues went from up almost 1.5% to down 1%. Counterparty risk is the key here (as you have been blogging about).
I guess the old expression really is true.
"Where there is smoke, there is fire".
Good job on being on top of this and the FUSION IQ model being generally bearish on the stock for months.
Posted by: IBH | Mar 14, 2008 9:57:37 AM
The CEO should go to jail. Don't pass go and don't get the $200. He was on Tuesday saying no problems and was comfortable with the estimates on earnings. Are you frigging kidding me?
Posted by: SPECTRE of Deflation | Mar 14, 2008 9:58:32 AM
Barry, this is further evidence that markets are losing the one commodity they can not afford to lost - trust.
I believe investors understand and can handle the fact that financial losses are part of the "game" - but will choose not to play if they can not trust the "players".
Regards,
George
Posted by: Agoracom | Mar 14, 2008 9:58:32 AM
Rumor floating around that UBS is in the same situation as UBS, anbody verify or refute?
Posted by: Jordan | Mar 14, 2008 9:59:01 AM
I would think we would be up 200 on news like that..... If citi,MS, JPM and S&P can fold... we may be able to get the economy back on track. Stop the Asshatery, on wallstreet.
Posted by: Eric Davis | Mar 14, 2008 10:00:21 AM
It also begs a question concerning the FED itself. The new auction Facility just announced days ago didn't take effect until the month's end. What in the F#CK are the jackasses looking at? They seem as clueless as anyone on these issues.
Posted by: SPECTRE of Deflation | Mar 14, 2008 10:03:37 AM
If BSC get halted, we always have options to sell the others! But hurry up!
Posted by: Ben | Mar 14, 2008 10:03:38 AM
WOW, what a turnaround. I was thinking of switching off my screens until BSC. Its hitting new lows by the second. Yeah I bet they shut it down in a few minutes. The bad news, I sold my LEH shorts last week.
Posted by: Innocent Bystander | Mar 14, 2008 10:04:48 AM
Well we better get some more Bail-Out Happy Talk from some of the members of Bush's economic team, or the CNBS'ers, or the Markets going to Implode-- Dow down 280.
Posted by: John | Mar 14, 2008 10:07:58 AM
The Apple Dumpling Gang is running the FED. This is unbelievable. How do you set up an auction facility that is too frigging late to help anyone? Ben, you frigging jackass!
Posted by: SPECTRE of Deflation | Mar 14, 2008 10:09:52 AM
Barry, the other day you asked about people, companies that had it completely ass backwards. This has to be, hopefully because who the flux knows, the 2008 winner hands down. If someone doesn't go the jail on this, we are totally scroomed as a country. The statement that things had blown up in the last day are so stupid that even the sheeple are scratching their heads.
Posted by: SPECTRE of Deflation | Mar 14, 2008 10:15:09 AM
This completely changes the function of the discount window. Hey, the Fed could lend to ME personally this way. So that I could by a yacht (for 28 days). All I need is for JPMorgan to act as a figleaf, a non-recourse conduit in the middle.
Where do I apply for the loan?
Posted by: Observer | Mar 14, 2008 10:18:57 AM
The worst thing about this whole episode is that since the Bear CEO appears to have either lied or been clueless, nobody will trust any CEO of any company till further notice...man I am busy.
Posted by: Dee Leverage | Mar 14, 2008 10:24:36 AM
Just like cronyism failed in Japan, it will fail here. No market bottom until transparency. Obfuscation is not a good economic policy. The market is calling the Fed's bluff, because they know they have a shit hand.
Posted by: njdoc | Mar 14, 2008 10:26:20 AM
Rumor floating around that UBS is in the same situation as UBS, anbody verify or refute?
Posted by: Jordan | Mar 14, 2008 9:59:01 AM
_____
The management team at Bear Stearns says everything is fine at UBS. Your money is safe.
Posted by: Marcus Aurelius | Mar 14, 2008 10:26:34 AM
parity with swissy, gold well past 1000, USD yen below 100....a beautiful day it is!
Posted by: Mikael | Mar 14, 2008 10:26:41 AM
It is amazing how a rumor caused a run on the bank (run on Bear Sterns)
Posted by: Run On Bear Sterns | Mar 14, 2008 10:27:00 AM
Well La Te Da on the FED Statement. Do any of the bright bulbs at the FED get it? Is this how you restore confidence in the financial system? Do we want to talk about inflation FED? This is what goes for an orderly market now? Let's get Poole the Poodle to talk about inflation worries to get the sheeple's minds off of the real deal.
Posted by: SPECTRE of Deflation | Mar 14, 2008 10:27:20 AM
Got Gold?
Posted by: Pool Shark | Mar 14, 2008 10:28:01 AM
Nevertheless, amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated.
If they're going to straight out lie to us, they could at least have the decency to make it sound plausible.
Posted by: gypsy howell | Mar 14, 2008 10:30:59 AM
It is amazing how a rumor caused a run on the bank (run on Bear Sterns)
Posted by: Run On Bear Sterns | Mar 14, 2008 10:27:00 AM
Joke of the day, right? LOL! You think a rumor did this? ROFL! I guess we should see more rumors that turn out to be fact, but we should be surprised when it happens? Is that you Dennis?
Posted by: SPECTRE of Deflation | Mar 14, 2008 10:32:06 AM
