The Battle for Wachovia

The Battle for Wachovia

On Monday, Citigroup and Wachovia Corp. announced a deal that would send Wachovia's banking operations to Citigroup in exchange for over $2 billion in stock. Citigroup was also to provide the Federal Deposit Insurance Commission (FDIC) with $12 billion in preferred securities and warrants. However, on Friday Wachovia announced that it would sell its entire operation to Wells-Fargo Bank, not Citigroup. The announcement set Citigroup executives aflame.

Citigroup released a statement on Friday stating, "Wachovia's agreement to a transaction with Wells-Fargo is in clear breach of an Exclusivity Agreement between Citi and Wachovia. In addition, Wells-Fargo's conduct constitutes tortious interference?." Analysts expect the Wells-Fargo/Wachovia deal to proceed over Citigroup's objections.

Citigroup (C) finished the week at $18.35. Shares of Wells-Fargo (WFC) ended trading on Friday at $34.56.

Googling Energy Initiatives

Google, Inc., best known for their Internet search engine, has entered the political waters with a proposal on energy issues facing the United States. Eric Schmidt, Google's chief executive, rallied for increased government spending on alternative energy sources such as solar and wind at a public event on Wednesday. The same day its CEO was stumping for alternative energies Google, Inc. released a paper calling on the federal government to spend $4 trillion over the next 22 years to modernize the nation's electricity grid and invest in alternative energy sources.

"The government has an opportunity to do a stimulus package," said Schmidt, "because we are going to be in a recession." Schmidt believes some sort of economic stimulus legislation will follow the $700 billion bailout bill Congress passed on Friday. Schmidt encouraged businesses to "take advantage of the willingness of the government to write huge checks." Shares of Google (GOOG) finished the week at $386.91.

False Alarm Hurts Apple

A "citizen journalist" from CNN reported on Friday that Apple, Inc. CEO Steve Jobs had been rushed to the hospital following a debilitating heart attack. News of the popular CEO's supposed health scare sent investors to the wire in an effort to unload shares. The report, it turned out was utterly false. After a steep drop following the report, shares recovered when the Cupertino, CA based computer giant denied the rumors. The earlier sell-off resulted in a brief drop of Apple stock to its lowest level in a year and a half.

Yet the day was not over for Apple. Following the House's passage of the financial bailout legislation mid-day Friday, Shares of Apple, Inc traded down by more than 3%. Shares of Apple, Inc. (AAPL) finished the week at $97.07.

The Dow started the week at 11,143 and closed at 10,325. The NASDAQ began the week at 2,183 and finished at 1,947. The S&P 500 started at 1,213 and ended at 1,099.

Landmark Legislation Raises Treasuries

Landmark Legislation Raises Treasuries

After early losses Friday, Treasuries traded higher following the President's signing of a $700 billion financial sector bailout bill. The two-year note yield dropped by three basis points; their biggest five day drop since 2001. The souring economy has led many investors to seek the relative safe harbor offered by government backed Treasury notes.

Assisting Treasury gains was a report released by the Labor Department showing that the nation lost more jobs in September (159,000) than in any month going back to March of 2003. Many traders also sough comfort in the wide spread belief that the Fed will cut interest rates again during their October 29 meeting.

The 10-year Treasury note began the week at 3.83% and finished at 3.64%. The 30-year Treasury bond began at 4.36% and finished at 4.12%.

Long-Term Rates Stagnant, Short Term Rates Adjust Down

Long-Term Rates Stagnant, Short Term Rates Adjust Down

Freddie Mac released its Primary Mortgage Market Survey for the week which showed that the 30-year fixed-rate mortgage (FRM) averaged 6.10% with an average 0.6 point for the week ending October 2, 2008, up from last week when it averaged 6.09%. Last year at this time, the 30-year FRM averaged 6.37%.

"Average mortgage rates were nearly unchanged during the past week, leaving rates above the levels of two weeks ago," said Frank Nothaft, Freddie Mac vice president and chief economist. "Reflecting the rate uptick from two weeks ago, the Mortgage Bankers Association reported that loan applications were down 23% last week.

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