Meltdown Worries Back to the Front Burner

An ugly morning greets traders who have been distracted by Eliot's Spitzer's travails. Spitzer's situation has been celebrated on Wall Street, in a way that reminds us of a death row inmates last meal. Enjoy it while it lasts, but reality is about to intrude. Their is plenty of news to feast on today:

Gold is finally trading at $1,000, the dollar is printing new lows, Carlyle's hedge fund is being liquidated by margin clerks and the unease over Bear Stearn's solvency continues. If you have stuck with it, the trend is your friend:

Bear's fundamental issue isn't liquidity or capital as much as the erosion of its business model as a result of the credit crunch. Some traders and analysts, noting the lack of any proof that Bear actually faces a liquidity crisis, have been drawing comparisons to a similar period at Lehman in 1998. The rumor-mongering then nearly sparked a cash crunch.

"We know that firms on Wall Street, given the nature of the balance sheet and their need to constantly replace funding, can succumb to liquidity crises even if they're fundamentally solvent," said Merrill Lynch & Co. securities analyst Guy Moszkowski. WSJ

Sluggish retail numbers are unlikely to put much of a bid under the market.

There are truly no places to hide in this tape. Healthcare investors can attest to that, the beatdown in many HMO’s has been particularly severe. Just ask Bill Miller; he hold AET and UNH in his top five and continues to trail his peers daily.

Can you hide in healthcare after the decline? The street is worried about the election, given Hillary’s inclination to put a hurt on the P&L’s. Kris Jenner might be the best vanilla healthcare manager on the Street and laid out his roadmap. Jenner is trying to be a bit contrarian in his thinking, but will be fighting the tape in the near term. See the names he likes in the clip below; his appearance on Fast Money last night was well timed, even if he is early on his calls.

In Dealing With Bear Stearns, Wall Street Plays Guardedly
WSJ

Comments:

<< Back to main