Traders Uneasy on Insider Probe

U.S. and European stocks, which were up initially on word of the Irish bailout, have weakened in the two hours prior to this writing. The weakness has coincided with a drop in the euro and dollar strength.

Several issues around euro zone bailouts, traders tell me: Ireland, Portugal and Greece. Is this the end or are we watching for other like Spain to follow suit? What about other 'peripheries' we haven't really been discussing, like Hungary, Czech, etc.

Spanish officials are on the tape saying they see no need for a bailout (exactly what Ireland said last week).

Another issue: the Bush tax cuts — it seems there may have been more stalemate than otherwise expected; Congress is on recess this week, making it even tougher for them to pass it in the lame duck session.

But the topic of discussion on trading desks isn't Ireland, it's the weekend WSJ article that implies Federal authorities are conducting a massive investigation into insider trading activities that might involve a wide group of "consultants, investment bankers, hedge-fund and mutual-fund traders, and analysts across the nation," according to the story. Goldman Sachs is trading down 1.5 percent..the article says regulators are looking into whether GS leaked information on transactions in ways that benefited certain investors.

Elsewhere:

1) Bank of Ireland down 18 percent and Allied Irish Banks drops 10 percent after Ireland accepted a bailout plan from the IMF and the EU. Worrying investors, as part of the bailout plan, Irish ministers warned that the country's banks will need more capital, which could lead to greater government stakes in the banks (remember…the government already holds large stakes in a number of the banks).

2) European banks like Deutsche Bank , Barclays , UBS , and Credit Suisse are down 1 to 3 percent.

3) Tyson Foods rises 4 percent after beating estimates ($0.64 vs. $0.56 consensus) on higher sales and margins. Helping the meat producer: higher prices that offset volume declines. While its chicken operations remained sluggish, higher beef and pork pricing helped boost revenues in the quarter.

Looking ahead, the company expects greater production in 2011 and plans to continue price hikes to offset higher anticipated feed costs.

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