Monday, April 16, 2007

Morning Market Comment

I went to bed last night wondering if my driveway would still be intact and it is! The big Nor'easter of '07 didn't take my bridge out though the normally quiet mountain stream that flows under it is a roaring torrent. It hasn't been so high and loud since tropical storm Floyd in 1999. Amazing.

That was fast. Sallie Mae (SLM) is going to be taken out by a group that includes JP Morgan (JPM), Bank of America and two private equity funds for $25 bln, or $60 a share. There had been reports Friday that a deal was coming.

March retail sales rise a modest 0.4%, excluding gasoline

The banking result that was of most interest to me this morning: Wachovia (WB). Wachovia first-quarter profit rises 33 pct. In this case while mortgage volume is declining at its Golden West Lending unit, the overall mortgage division actually boosted WB's results.

Citigroup also beat. Citigroup profit falls 11 pct, but trading surges.

WB and C are both moving modestly higher. As I noted last week, it seemed a bit premature that these names would implode. I'm holding July and out calls in a variety of names with greater concentration in subprime, alt-a, jumbos, etc. This includes Washington Mutual (WM) which reports tomorrow and Banco Popular (BPOP) which posts on Wednesday. I'm also adding Indymac (NDE) July, or October puts today as well (still doing some calculations there).

Efficacy concerns cloud Merck's big money maker Gardasil - yes, the vaccine that Merck (MRK) has seen fit to force on 11 and 12 year old girls in a number of states.

"Subprime Collateral Trends and Early Payment Defaults," gives some food for thought from Fitch (free registration required).

The "R" word disappears from Greenspan's repertoire.


WAL-MART tops Fortune 500 list...

No comments: