Financial Market Update-Mon., Oct. 13
- Oct 13, 2008
Stock markets in Asia and Europe were up on Monday, after their significant losses Friday. Hong Kong was the star performer, up 10 percent, while various Euro-markets were up between 5 percent and 8 percent. Compared to the aggregate declines of last week, however, these were fairly modest gains. No one is predicting that any of the equities markets around the world will out of the woods soon, or even near a path that would take them out of the woods. Still, it looks like it might be a good day for Morgan Stanley. Mitsubishi UFJ Financial is going ahead with its $9 billion capital infusion of the sickly former investment bank. In return, the Japanese investor is getting a 21 percent stake, represented by convertible preferred stock with a 10 percent dividend, plus a seat on the company’s board of directors. This is a change from the original deal, in which Mitsubishi would have gotten $3 billion in common stock and $6 billion in preferred. Early in the trading day today, Morgan Stanley stock recouped some of its losses from last week. As of about noon Eastern time today, it was up roughly $6 a share, or 62 percent above its Friday collapse price. Citigroup may be out of the running for Wachovia, but that doesn’t mean the behemoth bank has lost interest all together.On Firday, Citi amended its complaint against Wells Fargo and Wachovia asking for $20 billion more in damages, to go along with the $60 billion it already wants. Something about “restitution and unjust enrichment damages.” One can sue because of “unjust enrichment”? Has that not been a cornerstone of Wall Street for many a moon? Sovereign Bancorp Inc. has revealed that it’s in talks to be acquired in full by Spanish bank Banco Santander, which already owns about a quarter of the Philadelphia-based savings and loan. Sovereign shares have fallen 67 percent this year, so it’s like that the Spanish bank will be able to snap up the remaining part of the S&L for less than the $2.9 billion it paid for its existing interest in 2005 and ’06. Sovereign has been the largest independent thrift in the U.S. since the demise of WaMu, Words of comfort from Paul Krugman, who won the Nobel Prize for economics on Monday, as told to Reuters: “We’re going to have a recession and perhaps a prolonged one but perhaps not a collapse.” A “big” protest against the Wall Street bailout is planned for Thursday, organized by Ralph Nader, who is an independent candidate for president this year. Wall Street is probably quaking in its boots.