Thursday, 24 April 2008

Man bites Bear! 2008-03-17

Monday 17th March 2008 22.40 p.m.

One of the largest American brokerages and one of the 20 Primary Dealers of the US banking system, Bear Stearns was effectively swallowed up at the weekend at an extremely discounted price, covered in this article on Bloomberg: JPMorgan Chase to Buy Bear Stearns for $240 Million. Shareholders apparently will get $2 a share, compared to last Friday's close of about $30. The stock had already fallen from the mid-$50s range first thing on Friday, so the 93% discount mentioned here: Lehman Falls After Bear Stearns Sold for 93% Discount is a bit conservative! Actually, the 52-week high for the stock was 159.36$ last year, according to its Yahoo! Finance chart page. Apparently, Bear Stears' HQ building is worth $1.2 billion alone! JPMorgan Surges After Striking Deal for Bear Stearns. It looks like JPM got a good deal out of it by playing PacMan. Maybe a "consolidation" of the US banking system is at hand?

Bob Moriarty on the Korelin Economics Report last Saturday mused that if Bear Stears was allowed to fail, banks would shut all across the world.

Gold hit $1030+ earlier today on the Asian market and was strong until the New York market opened. Surprise, surprise! Stock markets all over the world were down quite a bit, but the Dow made a late recovery, surprise, surprise. Am I being cynical? Do I smell the scent of money being dropped out of helicopters in the morning? However, both the Nikkei 225 and the Dow 30 are under 12,000 at their respective closes of 11,787.51 and 11972.3 this evening.

Meanwhile, in Little Britain, gold reached and passed the historical landmark of £500 per ounce. The London AM and PM Fixes were £508.45 & £503.69 (that's $1023.50 & $1011.25 - or €649.51 & €641.58). There was a wide trading range today in the spot market from $993.30 to $1028.50. Volatility!

[Addendum 2008-04-24: This was the peak in gold at around $1030.]

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