WORST WEEK EVER FOR DOW
After an exhausting week the Dow closed lower Friday to record its worst week ever. In a sign of just how bad things have gotten the day’s drop of more than 120 points was greeted with sighs of relief. The Dow had plunged nearly 700 points in the opening minutes but made up much of those losses in the last hour of trading.
There's now some optimism in the market stemming from the G7 meeting currently underway in Washington where Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are meeting with their counterparts from the world's six other richest countries.
The industrial powers are urgently debating forceful new steps to prevent a worldwide economic catastrophe.
"We're in this together and we'll come through this together," President Bush declared at the White House as finance ministers and central bankers from around the world gathered nearby. "Anxiety can feed anxiety, and that can make it hard to see all that's being done to solve the problem."
At the heart of the problem is a crisis of confidence. Not since president Carter has the propensity for a bank to lend to anyone been so weak, explains Dylan Ratigan.
How are you playing?
I think the G7 will do whatever they have to do to grease the wheels, observes Jeff Macke. But I see no point in trading because I think you’re just gambling with money. There’s no real way to predict the future in this environment.
I didn’t trade on Friday but I have an eye on Excel Maritime which is now trading at one times earnings, adds Karen Finerman. That price focuses on what’s going on right now without any thought to the future.
The opening plunge was enough of a catharsis for Joe Terranova to become a buyer. There was a downward movement in gold that suggests the outcome of the G7 is going to be positive, he says.
It appears to me that the market is starting to ease, adds Guy Adami. The fact that gold is not going higher is encouraging. Gold is typically a flight to safety.
However that doesn’t mean we’re out of the woods. I also think there will be unforeseen outcomes from this crisis that we just don’t know about today.
Proactive policy right now will probably have a cost 3 years down the line, adds Terranova. And that’s inflation.
What do you think? Tell us now!
GOOD SIGN? FINANCIALS RALLY
Shares of JPMorgan , Bank of America and other money center banks posted gains on Friday, in stark contrast with former investment banks Goldman Sachs and Morgan Stanley .
Analysts and investors attributed the rise in other financials to short covering, as investors bought up shares believing government action to stabilize Morgan Stanley and the rest of the market may be possible this weekend.
Morgan Stanley tried to calm investors' fears by reiterating that its deal with Mitsubishi to invest $9 billion in the company's stock is on track, but its shares slid about 22% anyway, explains Karen Finerman.
I bought Morgan Stanley on Friday, adds Joe Terranova. I think the stock slide was due to Moody’s threat of a downgrade and nothing more.
On Friday oil prices dropped more than 10 percent and touched 13-month lows; for the week oil recorded its largest weekly dollar decline in Nymex history.
At this point, margin calls are certainly a pressure factor in the crude oil market," said Jim Wyckoff, president of Jimwyckoff.com, which provides commodities markets commentary.
"Some hedge funds, which are taking losses in other markets, are being forced to liquidate other holdings, such as those in the energy markets."
I think there were definite marching orders for someone to get out of the oil market on Friday morning, says Joe Terranova.
That puts to rest the idea that the commodities run-up earlier was not a bubble, adds Jeff Macke. Clearly it was speculation.
LATE WORD ON CHESAPEAKE ENERGY?
Chesapeake Energy disclosed that its Chief Executive, Aubrey K. McClendon, was forced to sell his shares of stock in the company in order to meet margin loan calls since the price of the stock has fallen precipitously.
I think these circumstances could make Chesapeake Energy a buy, says Guy Adami.
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CNBC.com with wires