52.8 F
San Diego
Tuesday, Mar 21, 2023

‘Crisis of Confidence’: Markets Short on Clarity

No matter what happens in Washington concerning a bailout bill (and all bets are off when it comes to Congress), last week’s market plunge was shocking in its depth and speed.

On Sept. 29, when it became clear the vote on the $700 billion bailout package would be defeated, the Dow plummeted 778 points, the largest drop in its history, eliminating $1.2 trillion in investor money.

“It’s a real mess, there’s just a crisis of confidence out there,” said Bud Leedom, president of Leedom Asset Management and publisher of the California Stock Report.

While the markets rebounded the next day, Leedom and others were concerned about how things would play out should Congress fail once again.

- Advertisement -

No telling where the bottom could go under that scenario, he said.

“Until we’re able to get some kind of understanding of the extent of the mess we’re in, I don’t see how you can put a bottom to this.”

The crisis wasn’t just felt in this country, but around the globe as major money center banks in Europe and Asia saw their access to capital so constrained it required the intervention of their national banks.

At the center of the problem is the volume of bad loans that are contained in the billions of dollars of mortgage-backed securities, and how many of those mortgages will eventually sour, said analysts.

“The uncertainty here is really deep,” said Charlene Davidson, an investment banker with McGladrey Capital Markets in Costa Mesa. “There’s a significant amount of private and public balance sheets that are holding some form of these derivative securities.”

Whatever transpires, the days of easy credit and fast money appear to be over.

And so, too, the type of unrestricted free markets that led to what is apparently the biggest shakedown of taxpayers in our nation’s history.

– – –

Leap and MetroPCS Make Nice:
Leap Wireless International and Metro & #173;PCS Communications were suing each other in 2006, but the firms put that spat to bed last week in a settlement and spectrum swap that some analysts view as a precursor to a merger. Both companies provide unlimited flat rate cell phone service, with Leap’s Cricket having a big presence here. MetroPCS, based in Dallas, made an unsolicited $5.2 billion offer to purchase Leap last year, which Leap executives said was vastly undervalued.

– – –

Ticker Takes:
SAIC said it was awarded a contract from the National Cancer Institute’s research and development center in Frederick, Md., that has a potential value of $5.2 billion over the three-year base period and seven ensuing years if all options are exercised Nextwave Wireless is selling its infrastructure business formerly called IP Wireless and is discontinuing operations at another unit, Go Networks, in Israel. Nextwave said it is seeking bankruptcy protection for the latter firm. It also said it has arranged $100 million in debt financing through the issuance of second lien notes ViaSat was awarded an order from the Navy’s Space and Naval Warfare Systems Command San Diego valued at $7 million Artes Medical said it raised $2.4 million in a private placement of common stock and warrants Realty Income Corp., a REIT, or real estate investment trust, conducted a public offering of 2.7 million shares priced at $26.83 per share Novatel Wireless said it completed an internal review by its audit committee and does not need to restate its financial reports and that no material weaknesses are expected to be reported for the first and second quarters of 2008. Also, the committee said it found no misconduct regarding accounting issues reviewed by its senior management team Royale Energy said it began drilling for natural gas in an area of northern Utah that has “significant upside potential” Axesstel entered into a distribution agreement with Getwireless, which also placed an initial purchase order for routers Mentor Capital, a fund of funds, began trading under its new symbol MNTR on the Pink Sheets last month Security With Advanced Technology, which changed its name to Pepperball Technologies Inc. last month, is appealing a delisting notice from Nasdaq because its stock price closed below $1 for 30 consecutive days.

Send any news on locally based public companies to Mike Allen via e-mail at mallen@sdbj.com. He can be reached at 858-277-6359.


Featured Articles


Related Articles