June, 2008

Jeff Pietsch submits: This June, the major U.S. equity indices swooned heavily as oil bubbled ever higher and financial sector woes returned to the fore. The S&P 500, Dow Jones Industrials and NASDAQ 100 cash indices recorded monthly losses of -8.60%, -10.19% and -9.62%, respectively; their worst monthly showing in six years.Indeed, the Dow's 1,288 point drop on cracks in the global growth storey left the index down for three consecutive quarters and in official bear market correction territory -- a combined phenomenon not witnessed since the late 1970s.

Trader Mark submits:This really is beginning to remind me of the late 90s and technology
when every index was in a hurry to stuff itself with tech stocks. Fresh
off two of our holdings (natural gas and coal) being added to the
S&P 500 [Jun 13: Cabot Oil & Gas (COG) and Massey Energy (MEE) Added to S&P 500] the Russell 1000 added "net" 8 energy companies, including 3 of our holdings - Alpha Natural Resources (ANR), Atwood Oceanics (ATW), and newly minted position Encore Acquisition (EAC).
Another company Petrohawk Energy (HK) is one of the hottest stocks in
the market as well. The Russell 1000, due to median size of companies
we own, is what we mostly measure ourself against.

• Ten

Trader Mark submits:I have no idea what the market will be doing today, this week, this
month, or this year. I have been saying the real economy is in serious
trouble, and that was stated under an impression oil would be at $90-$110
or so. What we have now is ever more frightful. The market has been and
continues to be in denial; I have pointed this out repeatedly even in
the face of conventional wisdom as the market raced to new highs in
fall 2007. I continue to stress most traders on Wall Street have been
conditioned to corporate-led recessions - not
consumer led. This is the first consumer led recession since the late
70s/early 80s and it appears most market participants are not students
of history. We still live in denial - only now in inflation. Inflation
is a tax on all things - consumers and producers.

Trader Mark submits:The Dow Jones Industrial Index (DJIA)
is the most widely followed index, holding our 30 most dear and near
corporations - the names everyone knows. It actually has a very
convoluted methodology which gives weight to the stocks within the
indix by price instead of market capitalization, like most indexes.
Hence the higher the stock price (which is quite an arbitrary thing,
since if a stock splits 2:1 it should not matter to its "importance" in
an index) the more it affects the DJIA. If you are interested in the
morbid details (you engineering types) you can read here. Essentially most of us who are around a while use more broad indexes such as the S&P 500, or Russell 2000.

Activist investor Mark Schwarz of Newcastle Partners on Monday filed a lawsuit against Royal Philips Electronics NV charging that the company's plan to sell its 69.5% stake in MedQuist Inc. for $285 million royally undervalues the company and violates its fiduciary duty to MedQuist's minority investors....

It's done. SABMiller plc and Molson Coors Brewing Co. closed the deal to combine their U.S. and Puerto Rican operations to create MillerCoors. On July 1, the new joint venture will begin operations. Leading the charge are CEO Leo Kiely and Tom Long, president and chief commercial officer. Tim...

The U.S. auto business is in shambles, and direct business partners of the Big Three such as American Axle & Manufacturing Inc. are experiencing collateral damage. The latest pothole for American Axle is a downgrade on Monday from debt rating agency Fitch Ratings. Fitch lowered its credit rating to BB- from BB because of the financial woes at General Motors Corp., which is hurting so much that some such as stock pundit Jim Cramer are advocating the company might be better off declaring bankruptcy....

Even as tight credit and a turbulent stock market have driven a number of hedge funds out of business, financial services firms Lehman Brothers Inc. and Aladdin Capital are looking ahead to better times, raising $3 billion apiece to back small hedge fund managers....

Its the last day of the second quarter, but the dire stats of dealmaking are already coming in....

A few weeks ago our Dealscape colleague Matthew Wurtzel did a little digging into the political contributions of Wall Street executives and found that, generally speaking, Wall Street prefers Democrats. That got us wondering about the political leanings of some leading corporate executives. Using this nifty tool at HuffingtonPost.com, we...

Mum's the word from SABMiller plc CEO Graham Mackay about whether his company has approached Grupo Modelo SAB de CV, according to a Reuters report. The rumored discussions have included the possibility of SABMiller acquiring part or all of the Mexican brewer best known for Corona, if InBev succeeds in its proposed $46.3 billion takeover of Anheuser-Busch Cos....

Even as Ford Motor Co. was seeking buyers last year for Jaguar, Land Rover and Aston Martin, the automaker insisted its Volvo unit was not for sale. But according to reports, the Dearborn, Mich., company was at least willing to listen to offers for the Swedish carmaker....

After 10 years in business, Paltalk has done little in the way of mergers and acquisitions, but that may soon change as president and chief operating officer Joel Smernoff predicts a year...

John Jansen submits: Prices of Treasury coupon securities exhibited very little movement today in a listless quarter-end trading session. The yield on the benchmark 2 year note is unchanged at 2.63 percent. The yield on the 5 year note has declined by one basis point to 3.34 percent. The yield on the 10 year note has increased by 1 basis point to 3.98 percent. The yield on the Long Bond climbed by a similar amount and it yields 4.53 percent.The 2year/10 year spread is wider by a basis point at 135 basis points.The 2year/ 5year/30 year spread is 48 basis points.

Kevin S. Price submits: As Barry Ritholtz noted over the weekend, certain media outlets seem determined to find reasons for optimism in equities' recent breakdown. Not that there's anything wrong with that. Who knows. Maybe these will turn out to be "attractive levels." One of these efforts to find a glimmer of short-term hope--Greg Zuckerman's weekend piece in the Wall Street Journal--revealed one of the stubborn realities of current market conditions.

Wondering why there's been a flurry of layoffs on Wall Street in the last few weeks? A Financial Time story suggests that year-end bonuses may be the culprit....