Good Afternoon,

Just one day after the Carlyle/Drake event, the markets were rattled by last week's rumours turning into ugly reality: Bear Stearns fell on the hard edge of capitalism and required an immediate defibrillator treatment courtesy of JPMorgan Chase and the Fed. Its shares during the trading day were at one point worth half as much as they were at the opening bell. Parts or all of Bear may be up for sale as it has now hired Lazard Freres to study 'strategic' alternatives for it. It appears the carcass will be dismembered and sold for whatever meat is left on the bones. PR folks at Lehman, UBS, and other firms have their hands full now. Hopefully, their bean counters and management have their feelers in order. Anyway, it has been raining shoes for a while now so Bear is not the last one to drop from the clouds.

At the end of the day, a firm's solvency is a function of the perception of its solvency by the outside world. While the firm may very well be open for business next Monday, the question is whether or not its clients will dare to pick up the phone and do business with it. Et voila, the housing crisis is now a confidence crisis. Tuesday's optimism quickly turned to despair. Strong statements are expected from the Fed over the weekend and bets have now risen substantially as to a full percentage point cut taking place on Tuesday.

Precious metals finished stronger in New York but were still mixed on this, the final trading day of an epic week. Spot gold was

last quoted at $999.60, up $4.40 on the day. The high point came earlier in the session, when spot prices reached for $1008.00 per ounce. Participants had initially awaited the release of CPI and consumer confidence (what confidence?) numbers this morning as well as a speech by Mr. Bernanke on 'sustainable' homeownership. The surprisingly tame inflation numbers were quickly forgotten as the horror story of the day played out in the markets.

President Bush spoke in New York and had nothing new to offer his audience other than the description of a 'rough patch' over which the US economy needs to drive and its drivers need to be mindful not to overcorrect. Silver was up 6 cents at $20.62 but platinum lost $18 to $2070 even after reports revealed that January was indeed a horrific months in terms of noble metals production in S. Africa. Mine output fell nearly 16% as the electricity problems basically shut down platinum group producers for more than a week. Palladium added $2 to $509 per ounce.

The credit/confidence crisis continues to be prime driver of the flight to safety and of the speculative mania exhibited by funds. The latter has pushed various commodity markets into states of distress. It has been at the center of the latest vertical line on the gold charts. Ditto, the inversely tilting line on the US dollar. For how much longer? We believe you may see some orchestrated actions on the part of central banks within the next 60 days. Bloomberg alerts readers that:

The dollar rose from a record low against the euro and traded above 100 yen as securities firms speculated central banks will collaborate to shore up the U.S. currency for the first time in 13 years.

Goldman Sachs Group Inc. and Morgan Stanley said coordinated action by policy makers to stem the currency's slide is increasingly likely. The gains limited the dollar's losses in a week when it fell to a 12-year low versus the yen, approached parity with the Swiss franc and traded above $2 per U.K. pound.

The market is certainly on intervention watch, said Hans-Guenter Redeker, global head of currency strategy in London at BNP Paribas SA, France's largest bank. If I was in their shoes I would intervene in a concerted way that supported the dollar.

This was before the big news unfolded in the markets today, but you can see where this may be going with a dollar at 99.25 yen and 1.57 euros. Stocks lost 194 point but basically ended the week without too much in the way of a loss. Not that they are immune from a bad week ahead. Good news? The stock of the maker of Jack Daniels was UP today. Tells you where the trading crowd/investment banker/regulator is heading promptly at 5:00 pm today. Hey, it IS St.Patty's Day after all, isn't it? And we even have a pot of (very expensive) gold to hold on to.

Happy Trading, Happy Weekend.