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Rescue Bill Drama, Global Slowdown Drag on Market

Update: The House is moving quickly. They already have a Discussion Bill in circulation regarding the Treasury’s proposal. Click to see it here.

Looks like they are not signing off on the $700 billion request.

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The Dow moved in a 300 point range (which is normal for the past couple of weeks) today to end near the lows, but the volume has been much lighter than last week.

Weakness in the mid-morning -- on concerns that the Treasury bill under consideration in Congress would be watered down and burdened with punitive measures -- gave way to a modest rally as the hearing ended (!), then in the last half-hour we again moved down toward the lows of the day.

Aside from the concerns over the Treasury bill, there was a very straight "global slowdown trade" that was on for the day, as large industrial and construction stocks (Fluor , Ingersoll Rand , Danaher , Deere ) were down 4 to 6 percent, while commodity stocks like US Steel , Alcoa , Newmont Mining and Freeport-McMoRan area also down 3 to 5 percent.

Late Update: Word that two well-known investors were dipping their toes into the sea of financial assets are helping move futures up 17 points after the close:

1) Warren Buffett is investing $5 b in Goldman Sachs has moved Goldman up about 8 percent after the close.

Buffett is getting preferred stock at a 10 percent yield. While this might sound like an amazing deal, bear in mind that the Goldman Preferred B shares, for example, are trading at an 8.9 percent yield (par is 6.20 percent!). The shares are also callable at a 10 percent premium. So it is a good deal for him, but not unbelievable.

2) J. Christopher Flowers, the founder of private-equity firm J.C. Flowers & Company, was approved by regulators to buy a small Missouri bank, the First National Bank of Cainesville, according to Bloomberg.

The bank only has assets of $14 million, but there is considerable speculation that he may use this as a platform to buy other banks.

These are two data points in a large sea, but in after-hours discussion traders are encouraged that two investors are finally ponying up for financial assets. CDOs, anyone?


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