What's Happening Today

March 10 (Bloomberg) — The hedge-fund industry is reeling from its
worst crisis in a decade as banks are now demanding more money pledged to support outstanding loans even when the investment is backed by the full faith and credit of the United States. ”

Why would banks increase reserve requirements on Treasuries? Answer: they need the money. The banks are so capitally impaired that they need to loot the hedge funds even though they are all selling, and therefore won't get much. However, as Carlyle Capital showed, the banks saw their chance and pounced. Even though they drove Fannie and Freddie back mortgage securities down a couple hundred basis points, the meal must have been juicy. If this gets the banks past the next hurdle, they could rebound nicely. If it doesn't, look out below. I am shopping this week, but I refuse to buy anything that hasn't broken down on an individual basis. Bear Stearns was down 12% today on insolvency rumors. If I had shorted it, I would cover now.