Bear Stearns Burst

3/16/08

Friday CPI data was inline with expectation and markets were performed good momentum before and shortly after market open. All of sudden, Bear stearns announced lack of liquidity and has asked help from federal bank of N.Y. It really means the credit market is in very very very deep trouble. If Bear stearns can bust, so can be washington mutual bank, Citibank, Lehman brothers.....etc. that all are holding the CDOs investment garbage(currently with people lack of confidence and do not know how to figure out the actual amount of the total asset) So, stock market has shifted again to downward right away when that news come out. Now, trend has resumed and will be retested the 11650 and I think it will not hold and the next support would be around 11000-11200. I have mentioned before do not buy or hold any banking and financial firm stocks because they are all in deep trouble.

Now, JPM will take over BSC with $2 a share(BSC last close price is $30) and with Japanese Yen and Euro both march to freshly new high, expect market will open low. Also, market has credited the Fed meeting surely reduce .75% interest rate.

Let discuss back with the problem how BSC got burst. I surely know government should not bail out those investment banking firm(they all doing speculative trading in most) but if Fed not step in to help(Fed bank is the last option), the whole credit/lending/banking are going to be dead. However, I still think the tsunami has finally come and not surprise to hear next victim would be one of the bigger banks or financial firms in coming days. Final, this act means Bear stearns is bankruptcy and we most likely would hear more to come. Good luck to everyone.