"The Federal Reserve’s
actions today may have been strongly influenced by Bear Stearns’
-Dick Bove, Punk Ziegel & Co.
Go figure: This morning’s announcement by the Fed seemed to be designed to help the
brokers and their fixed-income hedge fund clients who were struggling
— so said Brad Hintz, Bernstein Research covering the Financials. (we noted similar sentiment here)
He’s not the only one. Influential Bank/Broker analyst Dick Bove of Punk Ziegel (quoted above) specifically mentioned Beat Stearns (BSC) as the beneficiary of the Fed’s largesse.
According to Marketwatch: "Bear’s stock dropped 11% on Monday on concern that its borrowing costs
are rising. For a brokerage firm, which relies on steady access to
financing, such disruptions can restrain its businesses and leave it at
a disadvantage to financially stronger rivals."
Pretty wild stuff — $200 Billion in Fed lending against junk paper, to bail out one mid-size investment bank.
And the market’s reaction: Dow up 3.55% (417 points), Nasdaq +4% or more than 86 points, S&P500 up 3.7% or 47 points
Ain’t Socialism grand?
Fed action may have targeted Bear Stearns
Alistair Barr, MarketWatch
MarketWatch 3:57 p.m. EDT March 11, 2008