Monday, December 3, 2007

Buffett buys TXU bonds

Buffett bought $2 billion of TXU bonds, indicating there is buyers at the right price. That's why the Fed will cut rates nicely on December 11, with a larger cut on the discount rate. (flexibility) The cut, will engender confidence; as the market can't rely on Buffett and the vultures to pick up the debt that is outstanding. And the LIBOR rates show that the banks still don't trust each other, as the banks need confidence more than anybody because they know what is on their books that can't clear!

Fitch, however, indicated that, for the time being they are done, smacking ratings on CDO's. And once the yen quits getting hit, the market will be able to rally without the futures pressing on it in the pre-market.

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