"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey

How does a company get in so much trouble that they are run out of business, and little less than 17 months ago their stock was at new all time highs?

In the case of Bear Sterns and Lehman Brothers, both companies will BearLeh survive, and in the end, merge with another bank.

Lehman Brothers got rid of their CFO and COO this morning after the company reported a $3 billion quarterly loss.

They way I look at it is this cleansing of the system is a good thing.

Commercial Banks: Signs of a Bottom?

Lets be frank, I don't know where the bottom is on many of the high quality bank stocks. What I do know is many of them are selling at 50, 60, 70, and even 80% off their 52 week highs.

Using the old John Templeton line- "Buy into the teeth of maximum pessimism"- seems to apply in the case of the banks. I like to keep in mind that I'll never get in at the exact bottom, and never get out at the exact top. This being said, buying into maximum pessimism doesn't mean the pessimism will end soon. Sometimes pessimism will last several months and even a few years.

I am aware of the stresses on the banking system. I also recognize the importance of this group over let's say the NASDAQ in 2000. Politicians are under pressure to fix the financial system. They were not subject to the same kind of pressure to bailout the dot-coms.

My opposite side, contrarian view comes into focus when I see;

-Meredith Whitney of Oppenheimer begins scaring investors, and predicting the apocalypse.

- Companies like Lehman, Merrill Lynch, Citigroup, Wachovia, Washington Mutual, and many others begin replacing their executives.

- Hedge funds pile in on the short side.

- Short interest reaches historic levels.

- When the "D" (Depression Word) begins to surface, and similarities are made between 1929 and what is happening today.

Market Overview

Rising oil prices took center stage yesterday as crude oil jumped $5.07 to $136.38 a barrel, and the DJIA closed down 205.99 points. At this point I am not ruling out a re-test of the January lows.

This morning, the US dollar is higher and this is bring some needed relief to the high price of oil.

Yesterday, the Federal Reserves Beige Book report said economic conditions were "generally weak" in April and May. This being said, inflation continues to be a major problem and will probably spell the end to the Fed's series of rate cuts.

This morning, the Commerce Department reported that excluding autos, building materials and gasoline, retail sales rose 0.8% in May.

Lastly, the beer company InBev (makes Beck's and Bass) made a $65 a share offer for Anheuser-Busch.

Here's a question. Is the value of our currency so bad that a company that makes Beck's and Bass has enough cash (through conversion) to buy a US icon like Budweiser? The answer is yes!