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Rebound Pushed By Fed Rate Cuts |
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Sunday, 03 February 2008 |
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Once again it looked as if the techs were going to rein in the market's advance. GOOG earnings were a miss and it was looking down 10% in the pre-market.
Then MSFT, already interested in YHOO as evident a year ago when they tried to reach a mutually agreeable deal, tried a different tactic, mounting a tender offer boasting a 61% premium for YHOO shares.
Microsoft tender for Yahoo! not a sign of a new wave of deals . . . yet.
That got a lot of folks lathered up, believing that M&A driven by value buying was back and that waves of deals would start to emerge. In every economic breakdown there are sectors and companies therein that get hit and that become consolidation or takeover targets. In this economic slowdown it is the mortgage insurers and bond insurers as well as other financial institutions that got caught naked when the tide went out.
Tech is lower, but it is not in the toilet, i.e. not the problem in this slowdown as it was in 2000. No, it is the financials, particularly those deep in the housing slump that are collapsing and in real danger of disappearing as did so many techs and internets in the early 2000's. At this juncture, however, there are no deals, no rescues, bailouts, buyouts or even failed attempts in the financial sector.
There are rumors to be sure; each week we hear that Wilbur Ross and/or Warren Buffett are ready to swing in like vultures to feed on the carrion. Each week nothing happens. Even as bad as it is in the sector, they are waiting because with some S&P credit downgrades it is going to get a lot worse.
Source : InvestmentHouse.com
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