Reuters writes that banks being sued by Clear Channel (CCU) have asked for a delay of a Texas trial.

Reuters reports that share of Visa (V) fell on quarterly results

Reuters reports that Lewis Ranieri who helped create the current mortgage market says that house prices are off more than most analysts think.

Reuters writes that the Fed is thinking about paying interest on bank reserves.

Reuters reports that big US media companies are expected to have good first quarters because of their cable properties.

The Wall Street Journal writes that the CEO of Calpers will step down.

The Wall Street Journal also writes that a former senior Fed official blasted the bail-out of Bear Stearns (BSC).

The Wall Street Journal writes that airlines are trying to push their fares up.

The Wall Street Journal writes that the Fed will propose new and tighter policies for issuing credit cards.

The Wall Street Journal reports that Take-Two’s (TTWO) Grand Theft Auto IV game is expected to post record sales.

The Wall Street Journal reports that GM (GM) will idle some of its truck and SUV plants.

The Wall Street Journal reports that the FDA turned down a major new Merck (MRK) drug.

The Wall Street Journal writes that Blockbuster (BBI) is seeking a stake in Viacom’s (VIA) new premium cable TV venture.

The Wall Street Journal reports that Citigroup (C) may cover some of the losses at two hedge funds.

The Wall Street Journal writes that circulation at most large newspapers dropped sharply.

The New York Times writes that rising oil prices are not stimulating new production.

The New York Times reports that United (UAUA) is in merger talks with US Airways (LCC).

The New York Times writes that the WB TV network will return as a website.

The FT reports that Deutsche Bank (DB) had its first loss in five years.

The FT writes that the Saudis will launch a $5.3 billion sovereign fund.

The FT writes that the Rockefeller family is pushing for Exxon (XOM) to have a more independent board.

Bloomberg reports that profits at BP (BP) rose sharply.

Douglas A. McIntyre

He argued that the Fed had several other options such as taking a "tougher line" with J. P. Morgan; cultivating other suitors; selectively removing certain assets from Bear’s portfolio; or accelerating implementation of the Fed’s new offer to temporarily swap U.S. Treasury from its portfolio for Bear’s less liquid assets, the paper reported.

Douglas A. McIntyre

Reuters writes that the profit at Bear Stearns (BSC) fell 79%.

Reuters reports that Continental (CAL) and United (UAUA) have laid most of the groundwork for a merger.

Reuters writes that banks are more likely to sell shares at a discount as Q1 losses mount.

Reuters reports that Treasury want more disclosure from hedge funds on assets.

Reuters writes that Singapore sovereign fund Temasek may raise more capital after losing money on US investments.

The Wall Street Journal writes that oil production in Russia may be falling and could continue to do so.

The Wall Street Journal writes that Brazil has made a huge offshore oil discovery which could turn it into one of the wolrld’s largest oil producers.

The Wall Street Journal writes that Nissan and Chrysler will built full-sized pick-ups in a joint venture.

The Wall Street Journal writes that the US could lose its AAA rating if it has to rescue Freddie Mac (FRE) and Fannie Mae (FNM).

The Wall Street Journal reports that earnings from Google (GOOG), IBM (IBM), and Caterpillar (CAT) may confrim whether GE’s (GE) earnings are part of a trend or an aberration.

The FT writes that Citigroup (C) is allowing pivate equity firms to cherry pick its LBO loans to find which ones they want to buy,

The FT reports that Wal-Mart (WMT) plans to expand in Russia and Eastern Europe.

The FT writes that  "Tranche warfare" has broken out in the $450bn market at the heart of the
credit crunch as hard-hit investors scrap over the pools of debts that
make up so-called collateralised debt obligations.

Douglas A. McIntyre

Grasso, Greenberg, and Weill all claim that, like Hamlet’s father, someone poured poison into their ears while they slept. The evidence of that is either lost or hidden.

In the current crisis, many of he usual suspects have no power to sit at the table when the trouble rains down. Thain, head of Merrill Lynch (MER) and former CEO of NYSE, probably wishes he had never left as co-president of Goldman Sachs (GS). Merrill has been emasculated by losses. John Mack, who has run every large investment bank in the world, now keeps bodyguards so the Morgan Stanley shareholders will not not tar and feather him. The house of Morgan has lost its teeth. At Citi, Weill’s creation, the talk of survival mixes with discussions of breaking the firm into pieces. Just yesterday, John Reed, who helped create Citi a decade ago, said the whole thing was a bad idea.

The government, now run, at least on the financial side by new men, Bernanke and Paulson, has turned to what is left of the better banks and investment houses. Paulson looks to his old home, Goldman Sachs, for aid. James Dimon at the head of JP Morgan was begot by Weill and then sacrificed when Citi was created. He as a healthy balance sheet and a score to settle.

The Buddha-like figure at the center of much of the rescue of Wall St. is Lloyd Blankfein. He has only been CEO of Goldman for a short time. During that period his traders bet that mortgage-back securities would fall apart and made billions of dollars on that bet. This happened at about the same time his sales force was marketing the ill-fated subprime derivatives to customers. Goldman also helped sink Bear Stearns by indicating that it was not confident in doing business with the troubled brokerage. Blankfein is rarely visible and may only come out at night.

For better or worse all of the most troubling aspects of the financial markets will have to be run by Bernanke, Paulson, Dimon, and Blankfein. The first two have the power of the purse-strings. The other two have the only big financial company balance sheets that the Fed and Treasury trust.

In a storm, that is not many people to row the boat.

Douglas A. McIntyre

According to The Wall Street Journal "For the first time in more than a decade, the Federal Reserve has set up shop inside brokerages to monitor their financial condition" Bernanke has been reading George Orwell’s "1984"

The sleuths are stationed at Goldman Sachs (GS), Bear Stearns (BSC), Morgan Stanley (MS), Lehman (LEN), and Merrill Lynch (MER).

It is too much to hope that they will not find anything.

Douglas A. McIntyre

Reuters writes that Sony (SNE) will cut costs and boost order to fight the strong yen.

Reuters writes that LG Telecom may offer 3G service on a Google (GOOG) platform.

Reuters reports that RIM (RIMM) earnings did much better than expected.

The Wall Street Journal writes that the Senate agreed on a $15 billion housing stimulation bill.

The Wall Street Journal writes that GM (GM) may do more to help Delphi out of bankruptcy.

The Wall Street Journal writes that Live Nation (LYV) is near a $150 million deal with rapper Jay-Z.

The Wall Street Journal reports that AT&T (T) plans to use Google Android in some of its hansets.

The Wall Street Journal writes that an activist investor has called the Circuit City (CC) turnaround a disaster.

The Wall Street Journal writes that a judge ordered a probe of lending practices at Countrywide (CFC).

The Wall Street Journal reports that analysts say that sell-off in cable shares was overdone.

The Wall Street Journal reports corn is near the $6 level.

The New York Times writes that a bill for the FDA to regulate tobacco is going to the full House for a vote.

The FT writes that as nornal source of home loans have fallen Fannie Mae (FNM) and Freddie Mac (FRE) are driving new mortgages.

Bloomberg writes that George Soros sees the current downturn as the worst since the Depression.

Douglas A. McIntyre

Reuters writes  that US factory orders probably fell in February.

Reuters reports that the Fed approved the JPMorgan (JPM) purchase of Bear Stearns (BSC)

Reuters writes that CBS (CBS) news will cut staff.

Reuters reports that Huawei is not interested in buying Motorola’s (MOT) handset division.

The Wall Street Journal writes that the $29 billion loan to Bear Streans is made up primarily of mortgage-back securities.

The Wall Street Journal writes that major auto companies including Ford (F) and GM (GM) had a huge sales slump in March.

The Wall Street Journal writes that Intel (INTC) is making progress providing chips for mobile devices.

The Wall Street Journal reports that an airline association downgraded it forecasts for industry profitability in 2008.

The New York Times writes that a bi-partisan bid to help mortgage holder is gaining momentum.

The New York Times writes that the Shanghai market has dropped 45% since October.

The FT writes that the market rally could be partially due to short-sellers retreating from the market.

Money raised by Lehman and UBS (UBS) may signal an end to the rout in the equities market

Douglas A. McIntyre

The sale date was listed as March 28, 2008, which would have been last Friday.  His share holdings are now also listed as ZERO.  Jimmy Cayne did the same last week.  If these guys thought a much higher bid was coming shortly, would they be unloading their stock after JPMorgan Chase & Co. (NYSE: JPM) already juiced its buyout offer for a better public relations campaign?

This says that Novelly’s sale did not include 3,523.244 shares held in the Non-Employee Directors’ Stock Option and Stock Unit Plan.

We frequently discuss restructurings, insider activity, activist investor trends, IPO’s, back door plays into IPO’s, SPAC’s, spin-offs, and more on our open email distribution list.

Regardless of if a higher bid will or won’t materialize, shares are up 4.1% at $10.92 in late-afternoon trading before the close.

Jon C. Ogg
April 1, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

The most hopeful take Wall St. can have is that problems at US banks and brokerages are not as bad. But, the truth is that they could be worse. Goldman Sachs recently wrote that total write-offs for subprime and other bad credit will hit the system for $460 billion. Only $120 billion of that has been written off.

Investors would need to hope that the class of assets held by UBS are radically different from what Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Merrill Lynch (NYSE: MER), and other US financials have. That is possible, but not likely.

US financials have other exposures. Hedge funds had their worst Q1 in recorded history. Much of the capital base of that industry is borrowed from banks. In liquidations it is likely that not all of that will come back.

The press has not written much about SIVs, but they still exist in relatively large numbers. Some will fail because of their own derivative paper investments. Banks will end up bailing more of them out.

There are still great unknowns. The credit-default swaps market helped sink Bear Stearns (NYSE: BSC). According to The Wall Street Journal "Such swaps were written against $45 trillion of underlying debt as of the first half of 2007." If junk bond defaults go up, and they will, this market will get hit very hard. Banks and brokerage companies play in this sector, too.

If the Goldman estimate is even close to being true, US financial companies may still face $200 billion in write-offs. The flight of capital to 10-year Treasuries recently say that the "insiders" in the market think something is wrong.

Even Einstein, if he were still with us, could not plumb the depths of these troubles, but count on this. The largest banks and US brokers could face as much as $15 to $20 billion more in write-offs each. Given the states of the housing, LBO, credit swap, and hedge fund markets, it is not just possible, it is probable.

For a firm like Citigroup that could mean raising another $10 billion or more. The dilution could take that stock down to $15, if shareholders are lucky.

Douglas A. McIntyre

Last week, unexpectedly, financial shares took a terrible turn South. Among the really large companies in the group most were off 10%. Lehman (NYSE: LEH), Washington Mutual (NYSE: WM), Merrill Lynch (NYSE: MER), and Wachovia (NYSE: WC) were down much more. As money moved into 10-year Treasuries at a rapid pace, Wall St. was signaling that it wanted out of the sector. Something is still rotten in De mark.

Oppenheimer downgraded earnings estimate for a number of companies in the sector last week. There are still rumors that Lehman is in trouble. The market’s move into Treasuries may have something to do with that. The news that Lehman was bilked out of $250 million is not likely to help the shares.

Citigroup (NYSE: C) is now back below $21. If it drops another $3, it would breach its low. Wachovia is only slightly above its period low. Merrill (NYSE: MER) is close. And, Lehman fell every day last week.

Goldman Sachs estimates that US financial companies will eventually have credit losses of $460 billion. Only $120 billion of that has been written off already. Wall St. is concerned that there will be another Bear Stearns-like (NYSE: BSC) event. If most of the banks and brokerages make lows this upcoming week the majority of traders see something extremely bad coming.

The disaster which began last summer has not reached, to any great extent, the  home equity loan markets, money market pools. or the derivative credit swaps market. It only takes one more explosion to bring on another crisis.

Douglas A. McIntyre