West Coast condo site awarded to Cheung Kong-linked firm

[Unregistered]

Worries grow of deeper U.S. recession

- Economist Martin Feldstein believes U.S. is in recession, possibly a severe one

- Severe credit crisis is raising doubts about mild forecasts

- Bear Stearns went from a stock market value of $3.5B to being sold for $236M

WASHINGTON (AP) -- It has been almost an article of faith: Any recession this year will be mild and brief.

A growing number of economists have a U.S. downturn already figured into their forecasts.

But now the stunning meltdown of a top Wall Street investment bank and stubbornly persistent financial market turbulence has called that into question, raising fears that severe problems in housing and the nation's bedrock financial system could cripple the economy and wallop many millions of Americans.

No less an authority than former Federal Reserve Chairman Alan Greenspan wrote this week that "the current financial crisis in the U.S. is likely to be judged as the most wrenching" since the end of World War II.

Other noted economists are also sounding alarms. Harvard professor Martin Feldstein, the former head of the National Bureau of Economic Research, said recently he believes the country is now in a recession and it could be a severe one.

While it will be many months before the bureau's cycle dating committee, the unofficial arbiter of when recessions begin and end, makes its own ruling, a growing number of private economists already have a downturn figured into their forecasts. They are generally calling for a mild recession that will end this summer when the economic stimulus checks going to 130 million households start getting spent.

But the severe credit crisis that erupted last August -- and claimed its biggest victim this past weekend with the forced sale of Bear Stearns Co. -- is raising doubts about those mild forecasts.

"Bear Stearns was a clear wake-up call. It resonates with everybody and highlights the severity of the stresses in the financial system," said Mark Zandi, chief economist at Moody's Economy.com.

What got people's attention was how quickly Bear Stearns, the nation's fifth largest investment bank, could go from a stock market value of about $3.5 billion when the market closed on March 14 to being sold at the bargain-basement price of about $236 million two days later.

The Federal Reserve rushed in to take unprecedented actions. It provided a $30 billion line of credit to facilitate the sale and is employing Depression-era provisions that for the first time are providing direct Fed loans to investment banks. Most analysts said the Fed was justified and that its efforts highlighted the severity of the dangers facing the financial system.

The turmoil produced wild swings on Wall Street this week with the Dow Jones industrial average surging on Tuesday after the Fed aggressively cut a key interest rate only to plunge on Wednesday on renewed worries about the economy and then to stage a 262-point gain on Thursday. Markets were closed Friday.

More turbulence is expected in coming weeks because there remains a great deal of uncertainty about how many more victims the credit crisis will claim.

The problems began last year with rising defaults on mortgages as a housing slump intensified, but they have now spread to other parts of the credit markets with institutions growing fearful about making other types of loans.

It is the ability to get credit that makes the financial system and the economy it supports function. When banks stop lending to other institutions that, like Bear Stearns, depend on credit to conduct their day-to-day operations, the results can be catastrophic.

"We can't afford to stagger from one day to the next without knowing what large financial institution might be the next to go down the tubes because of a lack of liquidity. That is way too dangerous a game," said Lyle Gramley, a former Fed board member who is now an economist with the Stanford Financial Group. "It is possible that we could be entering the worst recession of the post World War II period. The threat is certainly there."

Because of Bear Stearns, many analysts are raising the odds that a 2008 recession could be worse than expected.

"The potential freezing up of the financial system could have pretty negative ramifications on bank lending which would have negative ramifications on consumer and business spending," said Nariman Behravesh, chief economist at Global Insight, a Lexington, Mass., forecasting firm. He said he had upped the chances of a worse-than-expected recession to 40 percent, up from 25 percent odds before Bear Stearns.

David Wyss, chief economist at Standard & Poor's in New York, said he now has a worst-case-scenario in which the country could endure a double-dip recession in which the economy would briefly recover this summer, helped by the $168 billion in tax relief, only to quickly slip back into a downturn. Under this scenario, the economy's total output, as measured by the gross domestic product, would drop by 2.2 percentage points, making it the third worst recession in the post World War II period.

The worst recession in recent decades, in terms of lost output, occurred in the 1973-75 period of oil shocks, when GDP fell by 3.1 percent, followed by the 1981-82 recession, when GDP dropped by 2.9 percent.

By contrast, in the last two recessions output fell by 1.3 percent in the 1990-91 downturn, and a tiny 0.3 percent in the 2001 recession, making that slump the mildest in the post-war period in terms of lost output. The 2001 downturn lasted just eight months.

Wyss' baseline forecast calls for the 2008 downturn to trim GDP by just 0.5 percent and last for nine months, from last November until August.

Under that forecast, unemployment, which hit a low in this expansion of 4.4 percent and now stands at 4.8 percent, will rise to around 6 percent, meaning 1.5 million people will lose their jobs. Under the worst-case forecast, unemployment jumps to 7.5 percent, meaning 3 million people would be tossed out of work.

"There would be bigger drops in the stock market and in home prices than we are now anticipating and more people out of work," Wyss said. "There would be a lot of pain all the way around."

While they are developing worst-case-scenarios, Wyss and other economists said they still believe the balance has not tipped from their more benign main forecasts. One thing that gives them hope is the expectation that Congress and the Bush administration, having acted so quickly to pass the first stimulus package, will move quickly, especially in an election year, to pass a second package if needed.

Also, analysts said the Bear Stearns crisis, which has already prompted the Fed to move more aggressively, will also probably trigger a bigger response on the part of Congress and the administration in offering help to homeowners to keep them from losing their homes because of mortgage defaults.

"Historically, when policymakers have acted in a concerted and aggressive way, that signals that we are nearing the end of the crisis," said Zandi. "If that occurs this time and the financial markets stabilize in the next few months, then the economy will suffer, but it won't be a prolonged and severe recession."

[Unregistered]

Worries grow of deeper U.S. recession

- Economist Martin Feldstein believes U.S. is in recession, possibly a severe one

- Severe credit crisis is raising doubts about mild forecasts

- Bear Stearns went from a stock market value of $3.5B to being sold for $236M

WASHINGTON (AP) -- It has been almost an article of faith: Any recession this year will be mild and brief.

A growing number of economists have a U.S. downturn already figured into their forecasts.

But now the stunning meltdown of a top Wall Street investment bank and stubbornly persistent financial market turbulence has called that into question, raising fears that severe problems in housing and the nation's bedrock financial system could cripple the economy and wallop many millions of Americans.

No less an authority than former Federal Reserve Chairman Alan Greenspan wrote this week that "the current financial crisis in the U.S. is likely to be judged as the most wrenching" since the end of World War II.

Other noted economists are also sounding alarms. Harvard professor Martin Feldstein, the former head of the National Bureau of Economic Research, said recently he believes the country is now in a recession and it could be a severe one.

While it will be many months before the bureau's cycle dating committee, the unofficial arbiter of when recessions begin and end, makes its own ruling, a growing number of private economists already have a downturn figured into their forecasts. They are generally calling for a mild recession that will end this summer when the economic stimulus checks going to 130 million households start getting spent.

But the severe credit crisis that erupted last August -- and claimed its biggest victim this past weekend with the forced sale of Bear Stearns Co. -- is raising doubts about those mild forecasts.

"Bear Stearns was a clear wake-up call. It resonates with everybody and highlights the severity of the stresses in the financial system," said Mark Zandi, chief economist at Moody's Economy.com.

What got people's attention was how quickly Bear Stearns, the nation's fifth largest investment bank, could go from a stock market value of about $3.5 billion when the market closed on March 14 to being sold at the bargain-basement price of about $236 million two days later.

The Federal Reserve rushed in to take unprecedented actions. It provided a $30 billion line of credit to facilitate the sale and is employing Depression-era provisions that for the first time are providing direct Fed loans to investment banks. Most analysts said the Fed was justified and that its efforts highlighted the severity of the dangers facing the financial system.

The turmoil produced wild swings on Wall Street this week with the Dow Jones industrial average surging on Tuesday after the Fed aggressively cut a key interest rate only to plunge on Wednesday on renewed worries about the economy and then to stage a 262-point gain on Thursday. Markets were closed Friday.

More turbulence is expected in coming weeks because there remains a great deal of uncertainty about how many more victims the credit crisis will claim.

The problems began last year with rising defaults on mortgages as a housing slump intensified, but they have now spread to other parts of the credit markets with institutions growing fearful about making other types of loans.

It is the ability to get credit that makes the financial system and the economy it supports function. When banks stop lending to other institutions that, like Bear Stearns, depend on credit to conduct their day-to-day operations, the results can be catastrophic.

"We can't afford to stagger from one day to the next without knowing what large financial institution might be the next to go down the tubes because of a lack of liquidity. That is way too dangerous a game," said Lyle Gramley, a former Fed board member who is now an economist with the Stanford Financial Group. "It is possible that we could be entering the worst recession of the post World War II period. The threat is certainly there."

Because of Bear Stearns, many analysts are raising the odds that a 2008 recession could be worse than expected.

"The potential freezing up of the financial system could have pretty negative ramifications on bank lending which would have negative ramifications on consumer and business spending," said Nariman Behravesh, chief economist at Global Insight, a Lexington, Mass., forecasting firm. He said he had upped the chances of a worse-than-expected recession to 40 percent, up from 25 percent odds before Bear Stearns.

David Wyss, chief economist at Standard & Poor's in New York, said he now has a worst-case-scenario in which the country could endure a double-dip recession in which the economy would briefly recover this summer, helped by the $168 billion in tax relief, only to quickly slip back into a downturn. Under this scenario, the economy's total output, as measured by the gross domestic product, would drop by 2.2 percentage points, making it the third worst recession in the post World War II period.

The worst recession in recent decades, in terms of lost output, occurred in the 1973-75 period of oil shocks, when GDP fell by 3.1 percent, followed by the 1981-82 recession, when GDP dropped by 2.9 percent.

By contrast, in the last two recessions output fell by 1.3 percent in the 1990-91 downturn, and a tiny 0.3 percent in the 2001 recession, making that slump the mildest in the post-war period in terms of lost output. The 2001 downturn lasted just eight months.

Wyss' baseline forecast calls for the 2008 downturn to trim GDP by just 0.5 percent and last for nine months, from last November until August.

Under that forecast, unemployment, which hit a low in this expansion of 4.4 percent and now stands at 4.8 percent, will rise to around 6 percent, meaning 1.5 million people will lose their jobs. Under the worst-case forecast, unemployment jumps to 7.5 percent, meaning 3 million people would be tossed out of work.

"There would be bigger drops in the stock market and in home prices than we are now anticipating and more people out of work," Wyss said. "There would be a lot of pain all the way around."

While they are developing worst-case-scenarios, Wyss and other economists said they still believe the balance has not tipped from their more benign main forecasts. One thing that gives them hope is the expectation that Congress and the Bush administration, having acted so quickly to pass the first stimulus package, will move quickly, especially in an election year, to pass a second package if needed.

Also, analysts said the Bear Stearns crisis, which has already prompted the Fed to move more aggressively, will also probably trigger a bigger response on the part of Congress and the administration in offering help to homeowners to keep them from losing their homes because of mortgage defaults.

"Historically, when policymakers have acted in a concerted and aggressive way, that signals that we are nearing the end of the crisis," said Zandi. "If that occurs this time and the financial markets stabilize in the next few months, then the economy will suffer, but it won't be a prolonged and severe recession."

The former Fed chairman is largely responsible for creating the biggest sub-prime mess in the US during his tenure. History will judge him for sure.

[Unregistered]

Worries grow of deeper U.S. recession

- Economist Martin Feldstein believes U.S. is in recession, possibly a severe one

- Severe credit crisis is raising doubts about mild forecasts

- Bear Stearns went from a stock market value of $3.5B to being sold for $236M

WASHINGTON (AP) -- It has been almost an article of faith: Any recession this year will be mild and brief.

A growing number of economists have a U.S. downturn already figured into their forecasts.

But now the stunning meltdown of a top Wall Street investment bank and stubbornly persistent financial market turbulence has called that into question, raising fears that severe problems in housing and the nation's bedrock financial system could cripple the economy and wallop many millions of Americans.

No less an authority than former Federal Reserve Chairman Alan Greenspan wrote this week that "the current financial crisis in the U.S. is likely to be judged as the most wrenching" since the end of World War II.

Other noted economists are also sounding alarms. Harvard professor Martin Feldstein, the former head of the National Bureau of Economic Research, said recently he believes the country is now in a recession and it could be a severe one.

While it will be many months before the bureau's cycle dating committee, the unofficial arbiter of when recessions begin and end, makes its own ruling, a growing number of private economists already have a downturn figured into their forecasts. They are generally calling for a mild recession that will end this summer when the economic stimulus checks going to 130 million households start getting spent.

But the severe credit crisis that erupted last August -- and claimed its biggest victim this past weekend with the forced sale of Bear Stearns Co. -- is raising doubts about those mild forecasts.

"Bear Stearns was a clear wake-up call. It resonates with everybody and highlights the severity of the stresses in the financial system," said Mark Zandi, chief economist at Moody's Economy.com.

What got people's attention was how quickly Bear Stearns, the nation's fifth largest investment bank, could go from a stock market value of about $3.5 billion when the market closed on March 14 to being sold at the bargain-basement price of about $236 million two days later.

The Federal Reserve rushed in to take unprecedented actions. It provided a $30 billion line of credit to facilitate the sale and is employing Depression-era provisions that for the first time are providing direct Fed loans to investment banks. Most analysts said the Fed was justified and that its efforts highlighted the severity of the dangers facing the financial system.

The turmoil produced wild swings on Wall Street this week with the Dow Jones industrial average surging on Tuesday after the Fed aggressively cut a key interest rate only to plunge on Wednesday on renewed worries about the economy and then to stage a 262-point gain on Thursday. Markets were closed Friday.

More turbulence is expected in coming weeks because there remains a great deal of uncertainty about how many more victims the credit crisis will claim.

The problems began last year with rising defaults on mortgages as a housing slump intensified, but they have now spread to other parts of the credit markets with institutions growing fearful about making other types of loans.

It is the ability to get credit that makes the financial system and the economy it supports function. When banks stop lending to other institutions that, like Bear Stearns, depend on credit to conduct their day-to-day operations, the results can be catastrophic.

"We can't afford to stagger from one day to the next without knowing what large financial institution might be the next to go down the tubes because of a lack of liquidity. That is way too dangerous a game," said Lyle Gramley, a former Fed board member who is now an economist with the Stanford Financial Group. "It is possible that we could be entering the worst recession of the post World War II period. The threat is certainly there."

Because of Bear Stearns, many analysts are raising the odds that a 2008 recession could be worse than expected.

"The potential freezing up of the financial system could have pretty negative ramifications on bank lending which would have negative ramifications on consumer and business spending," said Nariman Behravesh, chief economist at Global Insight, a Lexington, Mass., forecasting firm. He said he had upped the chances of a worse-than-expected recession to 40 percent, up from 25 percent odds before Bear Stearns.

David Wyss, chief economist at Standard & Poor's in New York, said he now has a worst-case-scenario in which the country could endure a double-dip recession in which the economy would briefly recover this summer, helped by the $168 billion in tax relief, only to quickly slip back into a downturn. Under this scenario, the economy's total output, as measured by the gross domestic product, would drop by 2.2 percentage points, making it the third worst recession in the post World War II period.

The worst recession in recent decades, in terms of lost output, occurred in the 1973-75 period of oil shocks, when GDP fell by 3.1 percent, followed by the 1981-82 recession, when GDP dropped by 2.9 percent.

By contrast, in the last two recessions output fell by 1.3 percent in the 1990-91 downturn, and a tiny 0.3 percent in the 2001 recession, making that slump the mildest in the post-war period in terms of lost output. The 2001 downturn lasted just eight months.

Wyss' baseline forecast calls for the 2008 downturn to trim GDP by just 0.5 percent and last for nine months, from last November until August.

Under that forecast, unemployment, which hit a low in this expansion of 4.4 percent and now stands at 4.8 percent, will rise to around 6 percent, meaning 1.5 million people will lose their jobs. Under the worst-case forecast, unemployment jumps to 7.5 percent, meaning 3 million people would be tossed out of work.

"There would be bigger drops in the stock market and in home prices than we are now anticipating and more people out of work," Wyss said. "There would be a lot of pain all the way around."

While they are developing worst-case-scenarios, Wyss and other economists said they still believe the balance has not tipped from their more benign main forecasts. One thing that gives them hope is the expectation that Congress and the Bush administration, having acted so quickly to pass the first stimulus package, will move quickly, especially in an election year, to pass a second package if needed.

Also, analysts said the Bear Stearns crisis, which has already prompted the Fed to move more aggressively, will also probably trigger a bigger response on the part of Congress and the administration in offering help to homeowners to keep them from losing their homes because of mortgage defaults.

"Historically, when policymakers have acted in a concerted and aggressive way, that signals that we are nearing the end of the crisis," said Zandi. "If that occurs this time and the financial markets stabilize in the next few months, then the economy will suffer, but it won't be a prolonged and severe recession."

The former Fed chairman is largely responsible for creating the biggest sub-prime mess in the US during his tenure. History will judge him for sure.

[Happy Feet]

Wall Street rises after Philadelphia Federal Reserve reading
Caroline Valetkevitch
Business Writer
Associated Press
New York, New York, U.S.
Thursday, 20 March 2008, 10:40am U.S. ET


Traders crowd the post that will trade Visa Inc. as they wait for the company's IPO to start trading, Wednesday, 19 March 2008. Visa Inc. shares soared more than 30% in their stock market debut Wednesday as investors latched on to the largest IPO in U.S. history. - AP Photo: Richard Drew

Stocks rebounded Thursday after the previous session's big drop, with investors eager to take advantage of bargains and cheered by a milder-than-expected drop in manufacturing activity in the Philadelphia region. The Dow Jones industrial average rose more than 100 points.

Earlier Thursday, stocks wobbled due to economic worries after the Labor Department said the number of newly laid off workers filing for unemployment benefits rose last week by a more-than-anticipated 22,000 to 378,000. That level is the highest in nearly two months.

But Wall Street found reason to buy back into stocks when the Philadelphia Federal Reserve said manufacturing activity is dropping in March by less than it did in February, and by less than many economists anticipated.

Investors appeared relieved about the Philadelphia Fed's report, but economic jitters are far from alleviated — in addition to the disappointing jobless claims report, the Conference Board said Thursday its index of leading economic indicators fell, as expected, for the fifth straight month in February.

The markets are apt to stay volatile for some time, as investors digest news on the economy and the troubled financial sector.

"It's the every-other-day theory — up one day, and down the next," said Scott Brown, chief economist at Raymond James & Associates.

In midmorning trading, the Dow rose 108.52, or 0.90%, to 12,208.18.

Broader stock indicators also advanced. The Standard & Poor's 500 index rose 12.39, or 0.95%, at 1,310.81, and the Nasdaq composite index rose 21.49, or 0.97%, at 2,231.45.

On Wednesday, stocks plummeted, giving back much of Tuesday's big advance as investors grew worried — once again — about the possibility of further troubles at banks with mortgage-related debt on their books. After surging 420 points on Tuesday, the Dow dropped nearly 300.

Bond prices slipped. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.37% from 3.34 percent late Wednesday. Bond trading will be finishing early Thursday ahead of Good Friday, when all the U.S. financial markets will be closed.

In earnings news, Nike Inc. reported late Wednesday a 30% gain in quarterly profit, signaling to Wall Street that some companies are faring well despite the credit crisis. Nike said sales overseas increased largely because of the weak dollar.

A plunge in commodities prices also gave investors some hope that lower energy and food prices might boost consumers' discretionary spending. Crude oil fell back below $100 a barrel on the New York Mercantile Exchange, and gold prices sank.

Some energy and metals companies fell on the pullbacks, however. ConocoPhillips fell $1.21 to $72.38; Barrick Gold Corp. fell $2.30, or 5%, to $42.93; and Newmont Mining Corp. fell $1.86, or 3.8%, to $46.86.

In other corporate news, Borders Group Inc., which has been reporting disappointing earnings in recent quarters, revealed early Thursday it may put itself up for sale. The nation's second-largest bookseller said it has lined up $42.5 million in financing so it can continue operating.

Borders fell $1.47, or 21 percent, to $5.63.

The dollar rose against other major currencies, while gold prices sank.

The Russell 2000 index of smaller companies rose 9.92, or 1.49%, to 674.05.

Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to a heavy 939.9 million shares.

Stock markets overseas were mostly lower. Hong Kong's Hang Seng Index fell 3.5%, but the Shanghai Composite Index closed 1.1%higher after an early plunge. In afternoon trading, Britain's FTSE 100 fell 1.15%, Germany's DAX index lost 1.08 percent, and France's CAC-40 1.29%.

Japan's markets were closed for a national holiday.

Swee liao lor!

[Unregistered]

Swee liao lor!

Everything is moving up. You are happy?

[Unregistered]

Everything is moving up. You are happy?

Will soon move down and out when the the guage how severe the recession is.

[Unregistered]

Will soon move down and out when the the guage how severe the recession is.

Recession in Spore, wait 20 years.
Recession in US, no confirmation. If yes, Spore will still grow >5% this year, worst case already factor in.
If no recession in US, Spore will grow >7%, same like last year, property will up another 30%.

[Unregistered]

Recession in Spore, wait 20 years.
Recession in US, no confirmation. If yes, Spore will still grow >5% this year, worst case already factor in.
If no recession in US, Spore will grow >7%, same like last year, property will up another 30%.

Yup. That is more like it.

[Unregistered]

Jim Rogers just call to buy DOW & equity, he said with the support of global central bank, equity is unlikely to fall.
Anyway, we have just seen a big reversal in commodity price, gold, silver, oil, sugar, coffee....all plunge last week from 10-20%, more to come.
In next 2 weeks, we will see US$ & DOW reverse the trend, moving up strongly. All the fund & liquidity, waiting at sideline, will start to buy strongly in global equity market. STI will rebound strongly, what will happen to property market then? with subprime & financial issues suddenly disappear, those who act fast will get some good buy. Those who wait, think, kiasi & kiasu will iss the boat again. You will hear them said, 'aiya actually I wanted to buy this & that, but....'
So hold on to your property, rent them out, they worth much more.

A classic of Chinese saying " See where the direction of the wind blows and turn your sail accordingly". No wonder he is a guru, at least he is smart to see the direction of the wind. No like the sour grapes, still chewing the sour grapes and refuse to let go.

Note: What he thinks/says a few weeks ago, no longer apply. Now, he says otherwise. SMART!

Wah lau!
I wish I can change as fast as him.

So how? So we follow Jim Rogers?

[The Straits Times]

Singapore interest rates likely to fall further
Fed cut and robust Sing$ could push interbank lending rate below 1%
Nicholas Fang
The Straits Times
Monday, 24 March 2008

Singaporeans can expect cheaper mortgages but lower savings and fixed deposit rates in the months to come.

This is after a move by the United States Federal Reserve to slash a key US interest rate last week.

The Fed had cut three-quarters of a point off its federal funds rate, bringing it to 2.25%, to fight a mushrooming credit crisis and a slowing US economy.

Economists in Singapore said the lowering of the Fed funds rate will have a knock- on effect in the Republic.

The Singapore Interbank Offered Rate (Sibor), or the rate at which banks lend to one another, tends to track the Fed rate.

Citigroup economist Kit Wei Zheng said: 'For Singapore rates, the trend is downwards. We expect the Fed to cut its rate to 1% and Singapore should follow with a lag.'



He lowered his forecast for the Sibor, estimating it would fall to as low as 0.75% by the end of the third quarter, down from an earlier estimate of 1%.

A recent report by DBS Group Research also forecast the Sibor would fall, to 0.83% in the second quarter, and remain at that rate through the second half before rising next year.

The three-month Sibor fell to a 12-month low of 1.25% last Monday, before recovering to 1.425% on Thursday, ahead of the Good Friday public holiday.

Mr Kit said Singapore rates were also affected by the Singapore dollar's appreciation against the US currency. He said the Singdollar is most probably at the top end of the secret trade-weighted band within which the Monetary Authority of Singapore (MAS) guides the currency.

'With the Singdollar expected to continue appreciating, MAS will aim to moderate it by flooding the market with liquidity, which will in turn pressure interest rates downwards,' he said.

OCBC economist Selena Ling said another consequence of the strong Singdollar would be a high inflow of foreign capital into the Republic. 'This can also contribute to lower interest rates.'

For consumers, the net result is both good and bad.

Banks recently embarked on a mortgage loan war, with Maybank firing the first salvo last month with an aggressive three-year, fixed-rate package offered at 1.68% for the first year.

DBS Bank and United Overseas Bank (UOB) have also unveiled attractive packages. UOB has one that offers a zero rate in the first year.

And with Sibor-linked home loan package rates likely to head south too, it could be a good time to refinance mortgage loans, experts said.

A DBS spokesman said: 'DBS offers transparent mortgage rates pegged to the Sibor and the CPF Ordinary Account rate, so our rates will move in tandem with market forces.'

But there is also the possibility that savings and fixed deposit rates could slump as interest rates go down.

OCBC's vice-president for group wealth management, Mr Fabian Lum, said the bank would review its deposit rates to keep them in line with prevailing market conditions.

And while the bank has not changed its savings rate recently, it lowered its 12-month fixed deposit rate for amounts between $50,000 and $1 million to 1.2% a year from 1.4% earlier this month.

DBS said that its savings deposit rates had not been adjusted since 2005, but added that its fixed deposit rates are always pegged to the interbank rate and would thus be adjusted accordingly.

CIMB-GK economist Song Seng Wun said that the low interest rates did not reflect a lack of liquidity on the part of banks. 'The loans-deposit ratio is still very strong, so banks definitely have the money to lend,' he said.

'But I think there is greater caution now, after what has happened in the US with the sub-prime crisis, and people are much more cautious nowadays when it comes to borrowing and lending money.'

[Unregistered]

Ha ha ha! It's coming down.

Crash crash crash! SIBOR will be crashing to 0.75% soon.

Don't say you haven't been warned.

[Unregistered]

Ha ha ha! It's coming down.

Crash crash crash! SIBOR will be crashing to 0.75% soon.

Don't say you haven't been warned.

Dear Sour grapes,

U want the CRASH, U got the CRASH, but sorry hor, this "CRASH" is not your "CRASH". Wrong CRASH..... sob sob.

This crash (SIBOR) is bad news for your crash (properties).

From,
Wait long long

[Unregistered]

Dear Sour grapes,

U want the CRASH, U got the CRASH, but sorry hor, this "CRASH" is not your "CRASH". Wrong CRASH..... sob sob.

This crash (SIBOR) is bad news for your crash (properties).

From,
Wait long long

Hey Mr. Wait Long Long,

Since SIBOR is so cheap now, you can throw a BBQ this weekend. I will bring some sour grapes for dessert if it is ok with you.


Your buddy,

Tan Koo Koo

[Maybank]

Dear Sour grapes,

U want the CRASH, U got the CRASH, but sorry hor, this "CRASH" is not your "CRASH". Wrong CRASH..... sob sob.

This crash (SIBOR) is bad news for your crash (properties).

From,
Wait long long

Hey Mr. Wait Long Long,

Since SIBOR is so cheap now, you can throw a BBQ this weekend. I will bring some sour grapes for dessert if it is ok with you.


Your buddy,

Tan Koo Koo

Stop all your BBQs and desserts and come down to one of our branches this weekends. We are really short-handed in processing the applications. Your assistance will be highly appreciated.

[Unregistered]

Hey Mr. Wait Long Long,

Since SIBOR is so cheap now, you can throw a BBQ this weekend. I will bring some sour grapes for dessert if it is ok with you.


Your buddy,

Tan Koo Koo

Dear Mr Tan Koo Koo,

The more the merrier as sour grapes are good for digestion after a hearty BBQ meal.

Thank u.

Your buddy,
Mr Wait long long

[Unregistered]

Dear Mr Tan Koo Koo,

The more the merrier as sour grapes are good for digestion after a hearty BBQ meal.

Thank u.

Your buddy,
Mr Wait long long

Beside sour grapes, do you also need want corn poser?

[Reuters]

Asia Stocks Rise
Louise Heavens
Reuters
Singapore
Monday, 24 March 2008, Singapore Time

Asian shares rose in holiday-thinned trade on Monday, led by a 4% gain for Taiwan after an opposition win in the presidential election boosted expectations for better trade ties and less political tension with China.

Oil fell back towards the $100 mark a barrel as top producer Saudi Arabia reassured consumers of its plans to boost supply and gold fell back, giving respite to the battered U.S. dollar and easing concerns about inflation.

"Unreasonably high commodities prices are returning to normal and this, along with the perception that U.S. financial markets have hit bottom, is boosting investor sentiment," said Kim Hak-kyun, an analyst at Korea Investment & Securities.

Activity was subdued in Asia, however, as markets in many parts of the region as well as in Europe remaining closed for the Easter holiday, with investors waiting for U.S. trade to resume later in the day.

U.S. stock index futures signalled that Wall Street would likely extend last week's gains.

Shares in Seoul added 0.6% and Singapore's benchmark climbed 3.6%. MSCI's index of shares outside Japan rose 1.3%, although it is still down 18% so far this year.

The MSCI ex-Japan index of financials extended gains to notch up a 1.4% rise by 0617 GMT after a report in the New York Times said JPMorgan Chase & Co was in talks to quintuple its offer to buy Bear Stearns Cos to $10 per share, suggesting that there may be more value in financial assets than previously thought.

JPMorgan's original agreement on March 16 to pay $2 per share for the stricken Bear, was widely considered a fire-sale price after the Wall Street bank saw the value of its investments pummelled by a meltdown in the subprime mortgage market.

"It (the new price) could be a relief for financial stocks and maybe a sign that the worst for the mortgage-backed debt market has passed," Chua HakBin, director Asia-Pacific economics and markets at Citigroup.

Tokyo's Nikkei index traded in and out of the red to end the session flat, although gains in financial stocks, such as Mitsubishi UFJ, cushioned the fall. Investors were braced for the upcoming corporate results season.

Yasuo Yamamoto, senior economist at Mizuho Research Institute, said sentiment at manufacturers has deteriorated as expected as rises in the yen and crude oil prices have weighed.

"Japanese firms will face a severe situation in terms of profits around the first half of fiscal 2008-09," he said.

Taipei Celebrates

Taiwan markets surged the first trading day after Ma Ying-jeou of the more China-friendly Nationalist Party, or Kuomintang (KMT) won the presidential poll, boosting hopes for a greater flow of tourists, trade and capital between Taiwan and China.

Ma has pledged to boost business ties with rival China to jumpstart the economy of the self-ruled island Beijing claims as its own.

Taiwan's main TAIEX jumped more than 6% at the open -- its biggest one-day percentage gain in more than seven years -- before easing back to a gain of 4%.

The Taiwan dollar also jumped to a 10-year high of T$30.218 against the U.S. dollar.

Elsewhere in the currency markets the dollar rose 0.2% against the yen to 99.87 yen, keeping distance from a 13-year low of 95.77 yen hit on electronic trading platform EBS early last week.

Confidence in U.S. assets was partially restored after the Federal Reserve unveiled steps to relieve the credit crisis.

Among an array of initiatives, the U.S. central bank pushed JPMorgan Chase to acquire Bear Stearns, started lending directly to securities firms for the first time since the Great Depression and lowered the benchmark fed funds rates by 75 basis points to 2.25%.

The yuan hit a fresh post-revaluation high against the dollar at 7.0508 for an eighth straight day on expectations that China would ensure relatively fast appreciation in the near term to fight inflation.

Oil fell nearly $2 dollars, with U.S. light crude for May delivery down $1.16 to $100.66 a barrel. Prices dropped by almost $9, about 8%, last week as investors fled the commodities complex on fears that gains had been overdone, giving a lift to the beleaguered dollar in the process.

Spot gold changed hands at $909.00/909.80.

[Reuters]

U.S. financial crisis is over, says Richard Bove of Punk Ziegel
Tenzin Pema
Reuters
Friday, 21 March 2008


Bove being interviewed on Bloomberg TV.

The U.S. financial crisis is over but problems facing the economy are not, said Richard Bove, financial analyst with broker Punk Ziegel, adding that this was a "once in a generation" opportunity to buy bank stocks.

"I do, in fact, believe that the crisis is over. There will be more negative developments but they will be meaningless," Bove wrote in a note to clients.

"This comment sounds ridiculous given the conviction on the part of most commentators that the worst is yet to come; the extent of the decline is unknown; and that the length of the decline is similarly unclear," Bove wrote.

The decline in capital markets has created an opportunity for banks to take market share from the brokers, he said.

"An environment has been created that will pump profits into the American banking system," Bove said.

"Investors are so focused on the potential for loan losses and the flawed valuations created by an obscenely invalid accounting rule supported by a soporific SEC (Securities and Exchange Commission) that they are missing this fact."

Bove said in the current crisis, the key event was the insolvency of Bear Stearns Cos Inc..

"This event sent so much fear through the markets that action was taken to solve the crisis," Bove wrote.

"The actions taken by the Federal Reserve were innovative, dramatic, and, in my view, brilliant because they went right to the problem," he said.

On Tuesday, the Fed cut interest rates by three-quarters of a percentage point, the 6th time in 6 months it has slashed the Fed funds rate target for overnight bank loans, to 2.25%.

The Fed also dusted off a Depression-era rule to let securities firms borrow directly from the Fed through its "discount window."

This decision was announced along with the Fed's promise to underwrite J.P. Morgan Chase & Co's takeover of Bear Stearns for the rock-bottom price of $2 a share.

[Bloomberg]

U.S. Financial Crisis Is Over, Analyst Richard Bove Says
Aaron Clark and Jeff Kearns
Bloomberg
Friday, 21 March 2008, 1:26 AM Singapore Time


Bove being interviewed on Bloomberg TV.

The U.S. financial crisis is over and the decline in bank stocks offers a "once in a generation" buying opportunity for investors, according to Richard Bove, the analyst who advised selling financial shares eight months ago before they tumbled.

"The last time an opportunity of this nature existed to buy bank stocks this cheap was in 1990," the Lutz, Florida-based analyst at Punk Ziegel & Co. wrote in a research note. "There will be more negative developments but they will be meaningless."

Bove said the Federal Reserve's rescue of Bear Stearns Cos., the fifth-biggest securities firm, and actions to increase banks' access to capital have been "innovative, dramatic" and "brilliant." The analyst advised clients to sell shares of the biggest U.S. securities firms in July. The Amex Securities Broker/Dealer Index declined 19% in the next four months. His recommendation to buy Citigroup Inc. in November preceded a 29% plunge in shares of the biggest U.S. bank by assets.

A gauge of financial stocks in the Standard & Poor's 500 Index rose 3.8% today for the biggest gain among 10 industries. The group of banks, brokers and insurers has been the worst performer over the past year, falling 28%.

$195 Billion

The Fed cut its benchmark rate this week by 0.75 percentage point to 2.25, the lowest level in more than three years, after $195 billion in worldwide bank losses related to subprime mortgages. The central bank has cut the target rate for overnight lending six times and slashed the discount rate for direct loans to banks 8 times since the middle of August, when the subprime collapse started to infect markets around the world.

"The actions being taken by the Federal Reserve are being mirrored by the Treasury, which now has finally grasped the scope of the problem," Bove wrote.

Citigroup Inc., the largest bank by assets, jumped 6.7% to $21.77 at 1:15 p.m. in New York Stock Exchange composite trading. Bank of America Corp., the second-biggest U.S. bank by assets, gained 3.7% to $39.99. Goldman Sachs Group Inc., the world's biggest securities firm by market value, rallied 3% to $171.49.

Bove recommended 18 July 07 that investors sell shares of Goldman, Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns. He also downgraded Citigroup, Bank of America and JPMorgan Chase & Co.

He then upgraded Citigroup to "buy" on 27 Nov 07, according to Bloomberg data. He raised Goldman to "market perform" on 4 Feb 08, preceding a 14% loss in the shares.

Goldman this week reported first-quarter profit that beat analysts' estimates as asset writedowns and a drop in fixed- income revenue weren't as bad as expected. Its next-biggest rival, Morgan Stanley, reported earnings that fell less than analysts estimated as record equity sales and trading offset writedowns from the collapse of the subprime mortgage market.

[Bloomberg]

'Big Rally' for Stocks to Continue, Jim Rogers Says
Carol Massar and Eric Martin
Bloomberg
Thursday, 20 March 2008


Jim Rogers, investor and chairman of Beeland Interests Inc.

U.S. stocks, which surged the most in five years yesterday, will likely continue their rally this year because the "out of control" Federal Reserve is cutting interest rates to save investment banks from collapse, investor Jim Rogers said.

The Fed's support is "why we're having a big rally, but that's not going to solve the problem," Rogers, chairman of Rogers Holdings and co-founder of the Quantum Hedge Fund with George Soros, said during an interview with Bloomberg Television from Singapore. "The system is terribly corroded."

The central bank is helping securities firms while delaying and deepening a bear market and recession, said Rogers, who is betting against financial shares. The Fed cut its benchmark for overnight lending between banks yesterday, continuing the most aggressive series of reductions since the rate became an explicit policy target in the late 1980s.

The Standard & Poor's 500 Index jumped 4.2% yesterday, the most since October 2002. The index this week dropped as much as 19.7% from its October record, nearing the 20% threshold of a bear market, following $195 billion in bank losses from the collapse of the subprime-mortgage market.

No 'Bullets Left'

"What are they going to do when it's down 30% or 40% or 50%?" Rogers said. "They're not going to have any bullets left. They're not going to be able to solve the problems at that point."

Rogers, who predicted the start of the commodities rally in 1999, traveled the world by motorcycle and car in the 1990s researching investment ideas for his books, which include "Adventure Capitalist" and "Hot Commodities."

Rogers said he continues to short Citigroup Inc., Fannie Mae and investment banks via an exchange-traded fund tracking financial firms and increased his bearish bet last week. Short selling is the sale of borrowed stock in the hope of profiting by repurchasing the securities later at a lower price.

The Standard & Poor's 500 Financials Index, which surged 8.5% yesterday for the steepest advance since March 2000, closed at a five-year low on 17 March 08.

Taiwan stocks are attractive, Rogers said. The nation's Taiex stock index has slumped 3.8% this year, trailing only Brazil and Argentina as the best-performing stock market among the world's 20 largest, according to Bloomberg data.

Halfway Through

Rogers, whose commodities index has climbed more than fivefold since its inception in 1998, said raw materials are about halfway through their rally.

He also said the dollar, which has declined 15% against the euro in the past year, is likely to weaken further. The Fed should stop cutting rates, which would end that decline, Rogers said.

The Fed's mandate is "to keep a sound currency, not to prop up Wall Street," said Rogers. He recommended selling the dollar in a 15 Nov 07 interview. The currency has fallen about 6.6% against the euro since then.

[Bloomberg]

Barton Biggs Expects 1,000-Point Gain in Dow Average
Brian Sullivan and Michael Patterson
Bloomberg
Friday, 14 March 2008

The decline in U.S. stocks is "way overdone" and the Dow Jones Industrial Average may rally 1,000 points, investor Barton Biggs said.

"We're in a financial panic," Biggs said during a telephone interview with Bloomberg Television from New York. "We're setting up for a really big rally. I don't mean 300 or 400 points on the Dow, I mean 1,000 points on the Dow. I don't know if we're going to get it next week or the week after. But this thing has gotten crazy and is overdone."

Biggs, a former Morgan Stanley strategist who now runs the $1.5 billion hedge fund Traxis Partners LLC, said stock markets from Germany to Hong Kong may bottom out soon after tumbling this year. Biggs's prediction in March 2007 that U.S. stocks were near a low preceded a 16% rally in the Dow average during the next four months. His forecast that the Dow would climb as much as 19% in 2007 overshot its actual gain by almost 13 percentage points.

"We're at a really crucial point," Biggs said. "This is a time to be buying stocks around the world and not to be selling them."

The Dow average has tumbled 16% to 11,951.09 since reaching a record in October after the subprime-mortgage market's collapse caused $195 billion in asset writedowns and credit losses at global financial firms including Citigroup Inc. and Bank of America Corp. A 1,000-point gain in the Dow from today's close would amount to an 8.4% rise.

U.S. stocks plunged today for the third time this week, sending the Dow average down 1.6%, after Bear Stearns Cos. required a bailout from the Federal Reserve and JPMorgan Chase & Co. to avoid collapse.

"Yeah, it's scary. It's always scary at bottoms. But I don't believe the economy is collapsing," Biggs said. "This is not the end of the world."

[Next Insight]

"Ready for a rally" - UBS Investment Research
"Sectors under the most pressure also rebound the most": UBS
Next Insight
Singapore
Thursday, 20 March 2008

Joining a small but growing chorus of bulls, UBS issued a report yesterday (19 March 2008) saying “there is reason for optimism in global equity markets.”

It noted that US monetary and fiscal policy response has been aggressive and more is likely on the way.

”Coupled with attractive valuations, low interest rates, and reasonable earnings growth, we believe prospects for a more sustainable rally in equities appear good.”



UBS has an overweight rating on the US, neutral on Global Emerging Markets and Japan, and underweight on Europe and UK.

Referring to the all the angst currently, UBS said there is a silver lining.

While fundamental pressures on the US economy stemming from the decline in house prices persist, the policy reaction to financial market turmoil has become increasingly aggressive, particularly from the Federal Reserve.

The uncertainty that has depressed overall equity market valuations is likely to dissipate, leading to a more sustainable rally than has appeared probable in recent months. “Thus, we are getting ready for a shift in markets to a more positive assessment of near term prospects based on the policy response we’ve seen so far and what may yet be coming.”

In deciding how to position oneself for the rally, UBS noted that the historical pattern of a market rebound suggests that the sectors that have been under the most pressure also rebound the most.

“Therefore, we have lifted our allocation to Financials and Consumer Discretionary.”

Looking back over previous market sell-offs (-10% from 12-month peak) that were followed by a sharp rebound (greater than 10% in three months), UBS found that the sectors that led markets lower also tend to lead in the recovery.

“This is an intuitive result insofar as a rebound in markets is probably driven by a change in fundamental expectations that allows the most impaired sectors to recover, while short-covering in bombed out sectors also reverses course.”

UBS added: “We believe that markets are poised for a broad recovery in valuations driven by a decline in risk premiums. These moves are likely to benefit the whole market.”


STI's 52-week range: 2,756-3,906





UBS Investment Research
Global Equity Strategy
Jeffrey Palma, William Darwin and Jennifer Delaney
Wednesday, 19 March 2008

Ready for a rally
- Finding the silver lining
Despite higher volatility, largely reflecting financial market stability concerns and expectations for a US recession, there is reason for optimism in global equity markets. Monetary and fiscal policy response has been aggressive and more is likely on the way. Thus, a major source of ‘tail’ risk appears to have been removed. Coupled with attractive valuations, low interest rates, and reasonable earnings growth, we believe prospects for a more sustainable rally in equities appear good.

- Broad market support
Sectors that underperform in a sell-off also tend to recover the most. Thus, we add to positions Financials and Consumer Discretionary. Even so, we believe a decline in risk premiums is likely to provide a boost to market valuations making a broadbased recovery. To reflect this more outlook we trim our defensive exposure (Healthcare and Consumer Staples), which we upgraded in January.

- Regions and stocks
We retain our regional allocations, where we are overweight in the US, neutral in GEM and Japan, and underweight Europe and UK. We are making several changes to our Global Top 40 stock list: Adding: Prudential Financial, News Corp, Barclays, and BNP Paribas. We are removing State Street, Sumitomo Mitsui Financial, BAT, and Novartis.

- Lingering challenges
We recognize that a move to become less defensive could still be early given that uncertainty could persist. Details of policy response are still unknown and global growth is still under pressure, which may keep earnings expectations muted.

........
........

[Unregistered]

Beside sour grapes, do you also need want corn poser?

I will bring some mad bulls for the BBQ. But be warned, you can contract Mad Bull Disease after going near them.

[Unregistered]

Beside sour grapes, do you also need want corn poser?

I will bring some mad bulls for the BBQ. But be warned, you can contract Mad Bull Disease after going near them.

Corn posers for who? For born losers?

[Reuters]

JPMorgan raises Bear Stearns bid to $10/share
Chris Reiter
Reuters
Monday, 24 March 2008, 10:00am U.S. EDT


A Bear Stearns sign is pictured at its office in Hong Kong's Central district 17 March 2008. - Photo: Victor Fraile, Reuters

JPMorgan Chase & Co said on Monday that it raised its all-stock offer for Bear Stearns Cos

to about $10 a share, roughly five times its original offer.

Under the revised terms of the deal, each share of Bear Stearns common stock will be exchanged for 0.21753 shares of JPMorgan common stock.

JPMorgan will also purchase 95 million new Bear Stearns shares, representing 39.5% of the investment bank's outstanding common stock. JPMorgan is buying the shares at the same price as its takeover offer and expects to complete the deal by April 8.

The boards of both companies have approved the revised takeover offer and the share purchase agreement.

JPMorgan's original agreement on March 16 to pay $2 per share in stock for Bear was widely considered a fire-sale price for the 85-year-old Wall Street investment bank. Bear collapsed as large subprime mortgage losses and falling confidence in the company prompted a run on the bank.

Bear shares surged more than 65% to $10.60 on the news of the higher bid.

[Reuters]

February existing home sales rise
Chris Reiter
Reuters
Monday, 24 March 2008, 10:30am U.S. EDT


A man looks around a home up for sale in Stockton, California 2 February 2008. - Photo: Kimberly White, Reuters

The pace of existing home sales in the United States rose in February to a 5.03 million-unit annual rate while prices took a record fall, the National Association of Realtors said in a report on Monday that painted a mixed picture for the housing market.

While February broke a six-month streak of decreasing home sales, it also saw an 8.2% decline in median home prices from a year ago. That drop to $195,900 was the sharpest since the trade group began keeping records in 1968.

Economists polled by Reuters were expecting home resales to fall to a 4.85 million-unit pace from the 4.89 million-unit rate for January, which remained unrevised.

The U.S. dollar rose and U.S. Treasury prices extended their drop to session lows after the stronger-than-expected data.

Lawrence Yun, NAR chief economist, said the home price decline probably spurred sales in some regions.

"Falling prices increase affordability but at the same time there is a psychological element of buyers who are sitting on the fence while prices drop," he said.

The inventory of homes for sale fell 3% to 4.03 million units at the end of February, which represents a 9.6 months' supply at the current sales pace.

Only the West saw sales decrease, with sales down 1.1%, while the other regions saw sales rise. Home sales were up 11.3% in the Northeast, 2.5% in the Midwest and 2.1% in the South.

[AP]

Stocks climb as JPMorgan raises Bear bid
Tim Paradis
Business Writer
Associated Press
Monday, 24 March 2008, 11:30am U.S. EDT


Traders Marshall Ryan, center, and Thomas Kay, right, wait for the Visa Inc. IPO to begin trading on New York Stock Exchange, Wednesday 19 March 2008. Visa Inc. shares soared more than 30% in their stock market debut Wednesday as investors latched on to the largest IPO in U.S. history. - Photo: Richard Drew, AP

Wall Street extended its big advance Monday as investors applauded a new agreement that will give Bear Stearns Cos. shareholders five times the payout than was outlined in a JPMorgan Chase & Co. buyout deal a week ago. Investors were also pleased by a stronger-than-expected housing report. The Dow Jones industrial average jumped about 200 points.

Stocks rose after JPMorgan said the company will boost its offer to $10 per share from $2. The revised plan is aimed at soothing Bear Stearns shareholders upset over JPMorgan's earlier offer, which was made at the behest of the Federal Reserve when Bear Stearns was near collapse.

Bear Stearns shares jumped $5.84, or 98%, to $11.80, while JPMorgan rose $1.19, or 2.6%, to $47.16.

Beyond the troubles of the financials, Wall Street was examining the housing sector — the root of much of investors' current angst. A real estate trade group said sales of existing homes rose rather than declined in February, as had been expected.

The Fed's move and even the housing figures appeared to alleviate some of Wall Street's concerns about souring mortgage debt and lenders' resulting hesitance to grant loans of any sort. The latest Bear Stearns deal signals that investors' losses might not be as sizable as feared.

"The reason we've rallied the last three or four days is people are saying 'Hey, even if this paper is worth less than people think, the Fed is willing come in a buy it at some level,'" said Charlie Smith, chief investment officer at Fort Pitt Capital Group.

In late morning trading, the Dow rose 199.61, or 1.61%, to 12,560.93 after rising more than 260 points on Thursday, the last day of trading before the Easter weekend.

Broader stock indicators also rose. The Standard & Poor's 500 index rose 20.76, or 1.56%, to 1,350.27, and the Nasdaq composite index rose 54.03, or 2.39%, to 2,312.14.

The Russell 2000 index of smaller companies rose 18.15, or 2.66%, to 699.57.

Monday's gains follow a volatile but ultimately strong week for the markets. The Dow and the S&P each showed gains of more than 3% for the week, while the Nasdaq advanced more than 2%.

Bond prices fell sharply. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.48% from 3.34% late Thursday. The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude fell 39 cents to $101.45 per barrel on the New York Mercantile Exchange.

The housing sector, which has offered a steady drumbeat of mostly negative news in recent months, gave investors a welcome lift. The National Association of Realtors said sales of existing homes rose by 2.9% in February to a seasonally adjusted annual rate of 5.03 million units. It was the biggest increase in a year and Wall Street had expected a slight decline. Still, the median home price fell by the largest amount on record.

Smith said further readings on the housing sector, including a report on home prices due Tuesday, could help determine whether Wall Street's enthusiasm will continue or prove short-lived. Further weakness in housing, he said, could mean banks will continue to struggle with a locked-up credit market.

Still, the Fed's move to broker the Bear Stearns buyout has allowed investors the sense that not all the debt guaranteed by mortgages is "nuclear waste." It will be some time before Wall Street knows whether the write-downs on mortgages already taken will be sufficient.

"The fact that the Fed is willing to come in and buy it at some level makes people think 'OK, it's not zero,'" Smith said, referring to the troubled debt.

Beyond housing, a report from Tiffany & Co. helped assuage some concerns about the health of high-end consumers. The jeweler said loans it made to a diamond company weighed on its fourth-quarter profit, but that earnings excluding items were in line with Wall Street's expectations. Tiffany jumped $5.19, or 13%, to $43.79.

Walgreen Co. rose $1.95, or 5.3%, to $38.73 after the drugstore chain said its second-quarter earnings rose 5 percent as it controlled expenses to offset slower sales growth.

Advancing issues outnumbered decliners by about 5 to 1 on the New York Stock Exchange, where volume came to 490.2 million shares.

Overseas, Japan's Nikkei stock average closed down 0.02%. Markets in Europe and in Hong Kong were closed for Easter Monday.

[AP]

JPMorgan raises Bear purchase price
Joe Bel Bruno and Stephen Bernard
Business Writers
Associated Press
New York, New York, U.S.
Monday, 24 March 2008, 11:35am U.S. EDT


The Bear Stearns headquarters, center, and the JP Morgan headquarters, right, are shown on Monday, 24 March 2008 in New York. JPMorgan Chase & Co. increased its offer Monday for Bear Stearns Cos. to $10 per share. - Photo: Mark Lennihan, AP

JPMorgan Chase & Co. increased its offer Monday for Bear Stearns Cos. to $10 per share from a bargain-basement price of $2 per share, hoping to assuage shareholders of the ailing investment bank.

Bear Stearns shares, which had already been trading above the initial offer price, surged above the new bid.

The move was clearly aimed at diffusing a backlash among Bear Stearns shareholders who felt the original deal undervalued the 85-year-old institution. JPMorgan Chase Chief Executive Jamie Dimon spent most of the week trying to woo Bear Stearns employees, who collectively own about a third of the company.

"We believe the amended terms are fair to all sides and reflect the value and risks of the Bear Stearns franchise," Dimon said in a statement, "and bring more certainty for our respective shareholders, clients, and the marketplace."

The new deal values Bear Stearns at about $1.19 billion — still a fraction of what the company was worth before its sudden near-collapse earlier this month. It also includes a provision for JPMorgan to buy 95 million new Bear Stearns shares immediately, which gives it a 39.5% stake in the company before shareholders have even voted.

The amended offer was Dimon's attempt to ward off any competition, and quickly move on with the acquisition. The two sides also changed certain guarantees JPMorgan made related to Bear Stearns' positions.

The new agreement also calls for the Federal Reserve — which helped broker the emergency deal to save Bear Stearns from failure — to provide a $30 billion term loan with portfolio assets put up as collateral. Those assets will be held by a newly created company managed by BlackRock Inc.

If any part of the portfolio defaults, JPMorgan will be on the hook to cover the first $1 billion in losses. As the assets are paid off, the Fed will receive principal plus any gains.

The Fed said the action is being taken with the support of the Treasury Department to "bolster market liquidity and promote orderly market functioning."

Alan Schwartz, Bear Stearns' embattled president and chief executive, has been vilified within the company for the past week for selling out too low. The company's 14,000 shareholders — most of whom depended on Bear Stearns' stock as part of their retirement plans — are facing significant job cuts if the deal goes through.

He said the substantial share issuance to JPMorgan "was a necessary condition" to maintaining Bear Stearns' financial stability.

"Our board of directors believes that the amended terms provide both significantly greater value to our shareholders, many of whom are Bear Stearns employees, and enhanced coverage and certainty for our customers, counterparties, and lenders," he said in a statement.

Bear shares had been much higher than its deal price last week in anticipation of a new buyout agreement. The stock surged on Monday, rising $5.34 to $11.30 after the new agreement was unveiled.

JPMorgan shares also rose, adding $1.79, or 3.7%, to $47.76 in morning trading.

[NPR]

Fed Weighs Unprecedented Move to Calm Markets
National Public Radio
Monday, 24 March 2008, 8:09 AM U.S. EDT

The Federal Reserve and the central banks of Europe and the U.K. may be considering a radical move to stabilize the financial markets: using taxpayer money to buy back high-risk subprime mortgage-backed securities -- those at the heart of the housing crisis.

[Unregistered]

Fed Weighs Unprecedented Move to Calm Markets
National Public Radio
Monday, 24 March 2008, 8:09 AM U.S. EDT

The Federal Reserve and the central banks of Europe and the U.K. may be considering a radical move to stabilize the financial markets: using taxpayer money to buy back high-risk subprime mortgage-backed securities -- those at the heart of the housing crisis.

The fat cats being bailed out with poor taxpayers money. Encouraging people to make risky bets and then bail them out. Wah what a plan!