Federal Reserve Chair Ben Bernanke said a failure of Bear Stearns would have been severe and hard to contain. He was only interested in getting the “deal” done and had no concern for the value of the offer or the stock price for Bear. He said when the Fed opened the discount window more broadly, they weren’t sure if the deal would go through.
The SEC’s Cox said their agency started monitoring Bear Stearns’ capital daily, in the summer of 2007. He said Bear Stearns’ customers were protected.
US Treasury’s Steel said the banking/credit crisis will take a long time to work through. He said the decision to rescue Bear Stearns was made based on protecting the markets, not just saving one firm. He cannot say whether or not there will be more bank problem or bank failures.
3 Comments
April 3rd, 2008 at 1:11 pm
Well..I finally took a long position for the first time in months!! I bought FXI on the pullback last night (long China index). It appears to have broken out of a wedge that began back in November. I am in at $142. Since it is up nicely this morning ($147), I will put a stop at my entry price of $142. Since we are still in a long term bear market, I will take my profits quickly on long trades, and cut my losses quickly also. I may sell if we get to $150 on this.
Although the economy is having troubles, I will look beyond that and try to find places to make money in the market. The short to intermediate trend for the market is up, therefore I will try to make quick profits while the market keeps moving to the upside. I will exit any long positions in the future as we approach higher levels of resistance.
April 3rd, 2008 at 1:54 pm
Nice trade and good luck. I too think we are in bit of a short term upswing however temporary it might be. Although personally I will not look to do any trading until after tomorrow’s jobs number comes out at the earliest.
April 3rd, 2008 at 4:09 pm
John -
Good point. It sounds smart to stay on the sidelines until after the jobs report. Although the report will likely be weak, it is hard to tell how the market may respond to it. I definitely will not be taking any new long positions until after I see how things shake out after the report. I figured this FXI trade was a safe, low-risk trade to make right now. At this point I am guaranteed no worse than a break-even on it (assuming no gap down).
I don’t mind being long in a bear market. I just need to be more nimble, take profits quicker, and cut any losses fast. Threre are plenty of good trading opportunities in a bear market. Even bear markets don’t go down to zero in a straight line. There are plenty of good tradeable counter-trend rallies. If the long term trend breaks I will be more aggressive on the bull side.