No Volume Markets

The DOW swung over 100 points yesterday so the volatility isn't gone. However, there wasn't much volume as most Wall Street traders are on a well-deserved vacation. The year may be ending but news still seems to be driving some of the market movement. Israeli attacks on Hamas pushed gold and oil a little higher but its effect seemed to be minimal. The bigger event seemed to be a withdrawn joint venture by Kuwait with Dow Chemical. Dow was hoping to receive $7 billion from the deal but Kuwait backed out. This left Dow in a precarious position to fund its acquisition of Rohm & Haas. This acquisition is fully financed with a $13 billion 1-year bridge loan from banks and an equity investment from Warren Buffett. This transaction will put a lot of leverage on Dow's balance sheet. Perhaps Dow can get Rohm & Haas to cut the price a little while also offering Berkshire a sweetened equity deal if they put up additional money to replace some of the debt. This is a tense situation but should be resolved in January.

The last story of focus is that GMAC became a bank holding company and received $6B from Tarp and the Federal Government. This should stabilize it for now and allow the company to finance automobile inventories at dealers as well as the purchase of new cars by consumers.

Don't expect much more from the markets this year as everybody winds down and gets ready for the new year.