Sunday, September 14, 2008

Wow - About a Year's Worth of Headlines Tonight

Wow, simply stunning. I'll start by saying that most of this "news" is breaking as I write so it might change by tomorrow morning.

1) Lehman to file for bankruptcy protection

Lehman, like Bear before it, continued to claim that they had adequate capital, that they'd liquidate non-core assets and they'd be fine. Once again, not so much. Personally, I'm deeply pained by the collapse of Lehman because they were the firm that gave me a shot and afforded me the opportunity to have a career on Wall Street.

Unfortunately, this is not likely to be the last independent Broker/Dealer to go down in flames.

2) Bank of America to buy Merrill

This is perhaps even more stunning than the Lehman news. First for the price - $29/share - which could be about $28.75 too high, and second that Bank of America didn't learn anything from their rescue buyout of Countrywide (remember that?). If, and it's a big if, Merrill is still in tack than perhaps this is a steal, but it's not likely.

3) Oil under $100

Despite the run up in gas due to refiner cut backs caused by Hurricane Ike, the writing is on the wall and oil continues it's march into the double digits. I don't foresee a change of trend until traders start to sniff inflation again.

4) Who is next?

This is going to be the big game on Wall Street today. Look for huge option activity in Goldman, Bank of America, Morgan Stanley, AIG, etc.

5) Impact on NYS

Let's not forget the dramatic impact that this is all going to have on NYS. As I've noted before, up to 20% of NY State's Tax Revenues are tied directly to Wall Street. As Wall Street collapses upon itself look for dramatic effects on Main St., Anytown, NY. The tax base is going to undergo a historic contraction and without a similar cut in services, employees, and other costs NYS is going to be in serious trouble.

On a happier note, my fantasy football team looks pretty good going into Monday Night :)

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