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Recap of Last Week
by Steve Romasko
The bear market investors are currently experiencing took a turn for the worst, when the S&P 500 not only set new lows for the cycle, but erased all of the gains from the 2002-07 bull market. Uncertainty was the order of the week, following poor corporate news, economics, and the Big Three leaving Washington empty-handed. Citigroup was front-and-center in corporate news, as investors worried that capital-raising is imminent among financials in order to offset the steep losses. Adding fuel to the fire, was surfacing signs that the commercial mortgage backed securities (CMBS) market is beginning to deteriorate— evident in the defaulting $209 million loan made to Westin Hotels in Arizona and South Carolina , as well as the defaulting $125 million loan made to the Promenade Shops in California; both loans were originated by JP Morgan. Investors saw no signs for a positive outlook, took this as such, and triggered a broad sell-off in the financial sector. Citigroup, however, took most of the pain with their share price plummeting 60% to $3.77, amid no indication of pay cuts from senior executives and announced plans to cut 52,000 jobs. Read the rest of this entry »
