Merrill Lynch says let em go

Layoffs at Merrill have been a long time coming. Now they’re right around the corner. In the next several weeks, the nation's biggest brokerage will quietly begin a big round of layoffs as it looks to cut costs and shore up profits as the credit crunch deepens, sources tell Trader Monthly. Merrill officials are drawing up plans to cut 10 percent to 15 percent from the investment banking division, sources familiar with the plans said. That could put as many as 300 Merrill bankers out on the pavement. (Merrill employs about 2,100 bankers firmwide.) Meanwhile, the firm is also preparing for another big writedown. Although the exact size and timing is unclear, some people familiar with the situation say it could be as high as $8 billion.

$75 billion in treasuries next week, any buyers?

In a sign investors' loss of confidence in credit markets is deepening, rates on three-month Treasury bills fell to the lowest level since 1954. The Fed will auction $75 billion in Treasuries next week in exchange for an expanded array of collateral to ease the logjam in lending. Treasury prices are at unsustainable levels and we've completely backed away from the market.
Fed policy makers on March 18 cut their target lending rate by three-quarters of a percentage point to 2.25 percent, saying ``measures of inflation expectations have risen.'' The cut was smaller than the 1 percentage point traders had expected with 90 percent certainty before the meeting.

This week, a solid majority of panelists believe mortgage rates will rise over the next 35 to 45 days. About one-quarter think rates will fall, and the rest believe rates will remain relatively unchanged (plus or minus 2 basis points).

Treasury notes and Elevated inflation

Treasury 10-year notes rose, erasing half of yesterday's losses, on speculation the Federal Reserve will be less aggressive in cutting interest rates and focus on inflation. The difference in yields between two- and 10-year notes narrowed for a third day as traders pared bets the Fed will reduce the target lending rate by a half-percentage point at its April 30 meeting. Policy makers cut borrowing costs less than expected yesterday, saying inflation remained ``elevated.''

Futures on the Chicago Board of Trade show 70 percent odds the Fed will cut the 2.25 percent lending target by a half- percentage point at its meeting on April 30, compared with an 88 percent chance yesterday. The rest of the bets are for a quarter-point reduction.

Gold, used to hedge against rising prices, plunged the most since June 2006, falling 4.1 percent on the New York Mercantile Exchange. Crude oil for April delivery fell $2.04, or 1.9 percent, to $107.38 a barrel. Treasuries tumbled yesterday, pushing up two-year note yields by the most since 2001, after the Fed cut the target lending rate by three-quarters of a percentage point to 2.25 percent and said measures of inflation are ``elevated.''

SP 500 daily March 19

After the Fed. Market has been hit with Hammer of money.

Oil will fall a bit, gold will retrace down and we will consolidate here while the bear re assess where the next financial crisis will occur.

Bank One, Discover, and American Express are writing off debt at a faster rate than ever before. Consumer credit is going to take it on the head.

Pre Fed Gap up 20 points

Well we have a 20 point gap up before the open. Fed meeting at 2:00.

The roller coaster will be leaving the station soon.

We have had some prettty large volume going through these past days and today could be the same.

We have some price divergence on the RSI.

Close the gap, rally big off the rate cut news and wathc the US currency dive.

Lehmans next with $5 a gallon soon

Well Bear Stearns was saved, Lehmans lost 25% of their value in one day and gasoline could be $5.00 a gallon before labor day.

Seems like this could be a long hot summer.

Some are calling this a bottom. Looks to me like we have been thrown a rope, to hang on to be hanged on. We shall see

Gold hit $1,033, Oil $112 Dollar dives

The Fed announced two initiatives designed to bolster market liquidity and promote orderly market functioning, and approved the JP Morgan - Bear Stearns deal. First, they authorized the Federal Reserve Bank of New York to create a lending facility to improve the ability of primary dealers to provide financing to participants in securitization markets.

It is available today, and will be in place for at least six months and may be extended as conditions warrant. Credit extended to primary dealers under this facility may be collateralized by a broad range of investment-grade debt securities.

Second, the Federal Reserve Board decreased the primary credit rate ("Discount Rate") from 3.5% to 3.25%. Lastly, the Board also approved the financing arrangement announced by JPMorgan Chase and Bear Stearns where Bear is being purchased for 1% of its value only 16 days ago! Tomorrow, the FOMC will meet, and obviously the odds that the Fed will cut the Fed Funds rate by 1.0% have increased. Mortgage prices are really a mixed bag ("where should they be priced?") with the 10-yr down to 3.41% currently.