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Minyanville's Market Recap: Commercial Paper, Pimco, Countrywide, Bulls Emerge!


Commercial Paper? Pimco? Countrywide? Markets rallied as investors gained confidence!


Stocks advanced as investors regained their confidence in the commercial paper markets. The Dow added +1.00% to close at 13,424, the S&P 500 added +0.83% to close at 1,483, and the Nasdaq Composite added +0.5% finishing at 1,998.

Financials performed soundly. The markets were nervously watching all week to see any signs of further deterioration in the commercial paper markets. Investor concern was assuaged when the Federal Reserve reported short-term debt dropped by $8.2 bln, compared with a decline of $31.3 bln a week earlier. (From Bloomberg) The investment banks surged on the news with Morgan Stanley (MS) leading the way adding +5.2%. Lehman Brothers (LEH) added +4.5%, Bear Stearns (BSC) added +4.3%, and Goldman Sach (GS) added +3.2%. Please read Professor Tatro's Global Rotation as he gives his views on the financials.

PIMCO boosted confidence in the credit markets. The WSJ reported it was launching a $2 bln distressed-debt fund. The PIMCO Distressed Mortgage Fund will target distressed debt such as mortgage-backed securities and collateralized debt obligations.

Countrywide Financial (CFC) added to the positive sentiment as well when the mortgage lender announced that it had secured an additional $12 bln credit line. The stock soared gaining +13.9% for the day. Professor Depew took note of this move in a title, Countrywide Shares Gain After Company Finds Quarter Under Desk. Read the rest of his thoughts in his daily column, Five Things You Need To Know.

Elsewhere, General Motors (GM) had an exceptional rally for the day as the world's biggest auto maker announced it had reached an agreement with the United Auto Workers union in backing a Voluntary Employee Beneficiary Association Fund. The move is expected to save Detroit's automakers billions in retiree costs. GM gained +10.05% with Ford (F) gaining +5.6%.

In economic data today, weekly initial claims figures came in better than expected at 319,000 vs. estimates of 325,000. The treasury budget was also released today coming in at -$117 bln vs. -$85 bln consensus.

Below is a recap of the idea flow on today's Buzz & Banter. Please note that stocks may appear on both bullish and bearish categories due to long and short term trades by our many Minyanville professors.

Some bullish trade or investment ideas: ADBE, DTSI, RIMM, NILE, IRBT, RMBS, NYX, MCD, BBW, MA

Some bearish trade or investment ideas: DECK, NILE, MA, GRMN, FMD, AAPL

Please cick here for our Buzz Bits for more of an in-depth summary of what happened real-time on the Buzz.

Have a good night, Minyans! We're all workin' for the weekend... one day left!

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No positions in stocks mentioned.

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