Posted on 08/10/2007 5:53:06 AM PDT by Hydroshock
Countrywide (CFC - Cramer's Take - Stockpickr - Rating) plunged 16% in early trading a day after the struggling mortgage lender warned in a regulatory filing that mortgage market disruption could hurt the company's financial condition.
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"Since the company is highly dependent on the availability of credit to finance its operations, disruptions in the debt markets or a reduction in our credit ratings could have an adverse impact on our earnings and financial condition, particularly in the short term," Countrywide said in the risk factors section of a filing made late Thursday.
Countrywide shares have been tumbling since problems with the subprime mortgage market came to light back in February. The stock hit a 52-week high of $45 just before rivals like HSBC (HBC - Cramer's Take - Stockpickr), New Century (NEWCQ - Cramer's Take - Stockpickr) and NovaStar (NFI - Cramer's Take - Stockpickr - Rating) said they would take big losses on loans gone sour to homeowners with poor credit histories. New Century subsequently filed for Chapter 11 bankruptcy.
Countrywide dropped as low as $23 Monday amid worries about the health of the credit markets before bouncing back during a widespread market rally earlier this week.
Shares fell $4.61 early Friday to $24.05.
Maintaining target rates isn't a bail out.
Yes it is. They should have let the market sort itself out.
Time to buy calls on the cheap........
Fed fund futures point to emergency Fed rate cut
By Steve Gelsi
Last Update: 7:56 AM ET Aug 10, 2007
NEW YORK (MarketWatch) — Fed fund future prices suggest the U.S. Federal Reserve will be forced to do an emergency inter-meeting rate cut within the next week, Merrill Lynch analyst Joseph B. Shatz said in a note to clients late Thursday. Fed Funds futures appear to be pricing in a substantial risk that the Fed may make the move after a series of recent events, including a move by the European Central Bank to inject $130 billion into banks. On Friday, the European Central Bank injected 61 billion euros ($84 billion) in a tender auction.
That was my guess, but I figured I would ask anyway.
Darn :)
Yes they meet the target rate but had to flood the market to do it.
Kudos! Just the tunes and verses change. A+++
And the government didn't bail out the S&L's. We covered that yesterday. The government was the insurer of S&L deposits. The government had to provide money to its insurance corporation.
Right, we don’t need any more of the “privatize the profit, socialize the risk” nonsense, that’s fascism. They took the chance let them take the lumps.
The government just prints more money.
....could be but I would inject two thoughts.....
1. if recession does loom the Feds are gonna lower interest rates big time.....
2. once all this shakes out, the market will price in the future credit crap and they psychology won’t play out..
.....just like in Feb when market lost 400 points on the China market loss......after that one time, it never even blushed when China went down.....the market hates uncertainty so once it has seen it before, it usually is not phased unless fundamentals are weak.....
ARM’s still can’t adjust beyond their parameters - i.e., the margin and index. The only way this affects ARM rates is if the indexes like MTA, LIBOR, and COFI go up, and, if anything, they’ll probably go down once all this hubbub calms down.
People REALLY need to calm down about this situation. Investors have temporarily pulled back from mortgage-backed securities but they will be back.
I agree...Going to get ugly soon...Hate to sound negative/pessimistic but the facts are we’ve been extremely spoiled for sometime now....The writing is on the wall as they say...The economic policies that the congress(mob) has implented years ago are starting to come to roost...Just look at the situation with China for example...The last 5-6 years anyone with a pulse got a mortgage...Somewhere down the line someone(us) got to pay for it, just the way it is I guess...
Yes, that could goose the market. And better yet, Bernanke and Paulson will have to choke on their words that the subprime mess was contained.
“-resetting ARMS (based on higher interest rates which reflect the perceived risk in the mortgage market) in the next few months will affect a lot of middle class folks with decent credit, not just the subprime market everyone is discussing.”
Most of those people will be able to refinance into decent rates.
Some are doing it right now, others are waiting.
You’re a voice a reason buddy! ;^)
In the real world that can be translated as, if someone don't buy our worthless paper we are going broke!
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