YHOO and HP Goose the Market, Financials Slap It Back Down

Jerry Yang has announced he will step aside and allow Yahoo to seek a new CEO.  This is probably one of the best decisions Mr. Yang has made for the company in a very long time.  His decision to scorn Microsoft's $40 billion bid for Yahoo will go down in history as one of the worst made by a non-financial company CEO.  That statement is not in hindsight.  It was patently clear at the time to anyone with half a brain that the company should've accepted Microsoft's bid.  I don't attest to have more than half a brain but you can read my comments mocking the idiot analysts at the time who kept claiming how badly Microsoft (holder of multiple billions in cash) needed Yahoo ($18 stock at the time with declining prospects) and how Mr. Softy would certainly raise his bid to win his prize.  Microsoft may or may not be back now that Mr. Yang is stepping down, but it is unlikely to bid much of a premium in this market.

In the surprisingly good new department, Hewlett-Packard actually raised guidance for the fourth quarter.  I know, I can't believe it either.  But good news is rare these days, so the market will take what it can get.  

Futures were higher on the HP and Yahoo news, but the market is roughly flat in early morning trading as attention returns to battering the living stuffing out of financials.  Make no mistake, the financials deserve their battering.  Hank Paulson and Ben Bernanke are testifying on Capital Hill today with Sheila Bair in tow.  Mr. Paulson has noted that he does not intend to use any more of the TARP while in office, unless absolutely necessary (i.e. some bank or insurance company calling him at 3 am).  Since financials trade mostly on government intervention news, investors are hoping to figure out what the newly elected administration plans to do with the rest of the money and if some companies will actually make it until the new administration takes over in January without an injection of funds.  This explains why insurance stocks are getting pounded and why they are considering buying small savings and loans to access to more liquidity.