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Market Update Set Alert


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Weekly Recap - Week ending 16-Jan-09

A bad start to the new year got worse this week as each of the major indices suffered material losses. The financial sector was at the heart of those losses as it plummeted 16% on the week amid a torrent of concerns about deteriorating credit quality and the seemingly unending need by the banks to raise capital to plug the gaping holes created by losses and writedowns on bad investments.

Bank of America (BAC) and Citigroup (C) were the biggest trouble spots this week. Shares of the former dropped as much as 46% at one point while shares of Citigroup fell as much as 59%.

Citigroup rattled investors with a decision to sell a controlling interest in its Smith Barney brokerage unit to Morgan Stanley (MS), which the market concluded was more of a forced sale than anything else to raise capital. Citigroup later announced, in conjunction with reporting an $8.3 billion fourth quarter loss, that it would be splitting into two units as it attempts to downsize its operations in meaningful fashion.

Ironically, it was Bank of America's effort to super-size its operations that got it into a heap of trouble with the market this week. Specifically, its acquisitions of mortgage giant Countrywide and former investment banking giant Merrill Lynch raised the bank's credit risk profile. That came back to hurt it in a big way as evidenced by Bank of America reporting its first loss in 17 years and needing an additional $20 billion in TARP funds to digest its Merrill Lynch purchase.


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5:07PM Calpine: Harbinger Capital Partners comments on Calpine registration statement; Harbinger, a major CPN shareholder, remains committed to its investment (CPN) 7.83 -0.04 : Harbinger Capital Partners Funds commented on today's announcement by CPN that it filed an amendment to its Form S-3 Registration Statement with the Securities and Exchange Commission. The filing is part of CPN's obligations under its successful emergence from bankruptcy protection in January 2008. The shares being registered were previously issued in connection with CPN's reorganization. No new shares are being issued or sold by CPN under the registration statement. Harbinger, a major CPN shareholder, remains committed to its investment.

5:05PM Pfizer receives FDA complete response letter for lasofoxifene (PFE) 17.50 +0.11 : Pfizer Inc said it has received a complete response letter from the U.S. Food and Drug Administration (FDA) asking for additional information on the company's application for lasofoxifene. The investigational compound is currently under review for the treatment of osteoporosis in postmenopausal women at increased risk of fracture. Pfizer is reviewing the letter and will work with FDA to determine the appropriate next steps regarding the company's application.

5:03PM Trex responds to filing of class action lawsuit (TWP) 16.89 +0.23 : Co responded to a class action suit filed in Washington by a plaintiffs' class action law firm alleging certain product defects. In response to the claims of the case, which focus on product surface flaking, co, noted that, "TWP has fully and publicly disclosed that a manufacturing problem affected a small percentage of product manufactured in its Fernley, Nevada plant beginning in 2003. This issue was entirely isolated to parts of the West Coast, only affected a small percentage of TWP decking materials produced in the Nevada plant, and has since been remediated."