Subprime - Light At The End of Tunnel?

Last Sunday, Bear Stearns was rescued from a major collapse by US Federal Reserve by providing a USD30billion finance deal to pave the way for a takeover by JP Morgan. Bear Stearns is no small feat, being the fifth largest investment banker in US! JP Morgan is buying Bear Stearns for US$2/share....what a steal!

Some interesting facts for Bear Stearns.....From only US$3.67 after the Oct 87 crash, Bear Stearns’s share price shot up to a peak of US$172 in Jan 07. Since then, the stock has corrected sharply and is now 83% off its Jan 07 peak!

In recent days, the Fed has focused efforts on a series of surprise moves to make funds available to banks and Wall Street firms, offering hundreds of billions of dollars in auctions and credit to thaw frozen credit markets.

Last week, Standard & Poor had also reported that an end is in-sight for sub-prime related writedowns at large financial institutions, providing a positive dose of relief for investors.

Goldman Sachs and Lehman Brothers, both major financial wall street companies, today reported better than expected financial results respectively....perhaps further providing some comfort that worst might already have happened.

On the other hand, US Federal Reserve is expected to undergo a largest rate cut in 26 years, probably by one percentage point, today.

Could these be the signs of worst of sub-prime could finally be over? More importantly, could we start to see a major turnaround in Wall Street's performance from hereon?

Personally, I am still less optimistic that it is going to end soon, but at the very least, there appears to be light at the end tunnel!