Sunday, September 14, 2008
If Merrill and Lehman are gone, Who's Left?
This is what stock market bottom's look like. Yes, tomorrow the market is going to be down, BIG (if Lehman files for bankruptcy protection). It has been reported that Merrill Lynch has agreed to be acquired by Bank of America.
So who is left? Washington Mutual, Wachovia, and AIG.
WaMu has no shot of surviving. Wachovia and AIG could make it. If they appear they are to survive, it would seem that most of the bad news is prices and discounted into the market.
In addition, we have the Fed Funds rate at a highly stimulative 2%.
So that is what the market has going for itself.
Our Mad Scientist tells me that the only "fly in the ointment" is gasoline prices. Granted, Oil has fallen and that should help, but the 2 Gulf hurricanes have left our inventories in TERRIBLE shape and have shut several large refineries for at least a week, and perhaps longer, and refiners make GASOLINE and DIESEL - you know, the stuff our economy runs on - and prices could spike for finished products decimating the economy and the market.
I went long the energy equities last week and I felt pretty good about the price action friday, but tomorrow might be painful. I can't say now that I would add tomorrow or not... but this is what stock market bottom's look like (unless energy comes in for the knock out).
Mentatt (at) yahoo (d0t) com
Posted by The Short Story Man at 5:33 PM