Interesting way to start the week:
Sunday evening: Oil up over $111 and NG over $10. The dollar continues to drop against the Japanese Yen, now 96, the lowest in 12 years. Gold up $25 to go over $1025.
Sunday: Bear Stearns (BS) is gone. BS bought by JP Morgan for only $240 million. The government agreed to back up to $30 billion of BS bad debt.
Here are some staggering numbers:
* BS made a profit of $2 billion in 2006.
* BS had a market value high of $19 billion and a PPS of $160 in the last 52 weeks. That is considering 118 million shares outstanding. So $19 billion wiped out in a year.
* BS, as late as last FRIDAY, had a PPS of $55 and a market value of over $6.5 billion. All wiped out in a few days.
Here is the kicker, BS 45 story headquarters building in Manhattan is said to be worth $1.2 billion alone.
So, JP Morgan purchased the total company, including all of its assets, for only 25% of the value of the HQ building and got the government to cover 30 billion of the bad debt.
Interesting times we live in.
Expect the FED to drop rates again this week, further devaluing the dollar and continuing to put inflationary pressure on O & G, gold, commodities, etc....
Where are you CB? Take advantage of the times we live in.
