Asked Friday afternoon what he was buying, one trader on the floor of the New York Stock Exchange (NYSE) joked a “one of those titanium umbrellas, so I don’t get crushed when walking down Wall St by the guys jumping out of windows”. Yes last Friday bottom pickers got spanked again and they would probably have more joy on a Tokyo subway train.

It’s not every day that two banks go wallop! But Indymac had its assets seized Friday by U.S. regulators as the Californian mortgage lender ran out of cash and 124 year old Danish bank Roskilde had to be bailed out by their Central Bank after huge writedowns on their property portfolio. Who will be next to take the fall? Banks are sick and there simply isn’t enough medicine to go around. Indymac represents the second largest banking failure in U.S. history for your information, yet it hardly made the front page! A report in the New York Times has analysts predicting up to 150 more U.S banking failures (out of 7,500 banks) over the next 12 to 18 months.

Treasury Sec. Hank Paulsen waded into the GSE (Government Sponsored Enterprises) mire over the weekend by extending U.S. Treasury credit lines to Fannie Mae & Freddie Mac. They will also be allowed to access the Federal Reserve’s Discount Window and Paulsen is even seeking authority from Congress to buy an equity stake in these agencies. Though this news is a buoy to confidence the problem remains that there is a huge conflict of interest in having private profit-driven shareholders in a company designed to serve a public purpose. These tensions come to the fore when you have a blow out in the property market and ultimately the taxpayer will have to pick up the tab,

The news from the GSE’s weighed on the Dollar as any nationalization of Fannie & Freddie would see the Treasury taking on an extra $1.48 trillion of debt!

The Mole’s final word on this! Government interventions in markets have unintended consequences and huge spillover effects. Whatever happens, the shape of the U.S. mortgage market has altered in a way that will prolong the housing slump.

Data on the Radar
Just Eurozone Industrial Productiont today, which should be weak, and U.K. PPI (wholesale inflation), which could be another upside shocker.

Equities: This Bud is for … EU
Belgian brewer InBev is paying $70 a share ($52bn) for Anheuser-Busch Cos. The deal hammered out Friday probably saved the Dow Jones from a far larger drop.

Stocks in the news this Monday morning included tyre make Continental (up 19% pre market) on a bid from ball bearing maker Schaeffler Group. TNT may find support on reports its in talks with FedEx. ITV may also climb on an upgrade from Morgan Stanley and an FT report of a possible bid by privately owned Endemol. Philips results just out beat expectations and Apple has apparently sold 425k IPhones in just 3 days!

This weeks equity news flow should be dominated by U.S. earnings figures, particularly from the under pressure financial sector. From tomorrow onwards we get heavyweights Citigroup, Merrill Lynch, J P Morgan and State Street. Also reporting are bellwether stocks Ebay, Intel, Microsoft and Google.

Breaking News of “Alliance and Leicester in talks on takeover offer at 299p plus an interim dividend of 18p”. No names yet but Lloyds, Banco Santander , India’s ICICI or Sandi group Handelsbanken spring to mind as possible suitors. Stock closed at 219p Friday so this is a serious premium in this market and should give a much-needed boost to UK and Irish lenders today.

Off for a very unhealthy breakfast, but it’s raining (again). Best get my trusty old SBC Warburg umbrella out (bit of a collector’s item now).