TheStreet.com's Jim Cramer says our problems are so widespread, he sees lots more IndyMacs before we're out.
You don't need me to tell you it's awful out there. You don't need me to tell you that there's no quick fix for any of these things. But what might help you understand why it feels so bad this time is that I have never, in my career, seen so many companies go off track at the same time. This is one unbelievable moment, and it is made more horrible by the day as companies' stocks just get pummeled, causing people to then question the very viability of the companies involved.
First, obviously, are Fannie Mae (NYSE: FNM) (Cramer's Take) and Freddie Mac (NYSE: FRE) (Cramer's Take). We don't know what will happen, but we do know that their futures are much darker than their pasts. Their best hope: a Democrat becomes president and shows the usual love to both. But as investments, they are pretty much perma-losers going forward. The losses are that heavy. Yes, it is true that two years from now they will be better, but will the government let them limp through to that? View them as calls on a Democratic win.
We all know that Citigroup (NYSE: C) (Cramer's Take), Wachovia (NYSE: WB) (Cramer's Take), Washington Mutual (NYSE: WM) (Cramer's Take) and National City (NYSE: NCC) (Cramer's Take) are in trouble. Bank of America (NYSE: BAC) (Cramer's Take) says it isn't in trouble, but obviously the market doesn't believe management because the stock failed to rally when it said its dividend was safe. Any short-selling hedge fund could hire 30 actors and have them line up at a Washington Mutual or two and get a bank run going. Then we would have to hear about a "hasty" Treasury department plan to bail out WM. Hasty? How can these guys not see it coming?
TheStreet.com's Jim Cramer says the mortgage problem is in the process of cresting, which is why the stocks have largely bottomed.
We are in the heart of default country, and we knew we would be. This is the toughest moment. You need to go back and look at the calendar to realize the astonishing acceleration in defaults. It's simple: This moment two years ago is when the underwriting standards were the lowest, and this is the moment when the defaults will be the highest because the loans are resetting at high levels and most of the lenders, lenders like Countrywide (NYSE: CFC) (Cramer's Take), are more interested in getting as much out of a borrower as possible before kicking him out than working out the loan.
Think about it.
In the second quarter of 2006, the housing industry was going strong. We were in the 7-million-homes-changing-hands mode, and the vast majority of those homes required little money down, with home equity loans being taken out immediately to pay whatever little interest was being charged. These were the moments of the ultimate no-doc-high-fee loans by New Century Financial, Ameriquest, Resmed (Ditech), American Home Mortgage, Novastar, and of course, Countrywide. This was when the homebuilders' mortgage arms lent the most terribly.
D. R. Horton (NYSE: DHI) shares are down over 6% in premarket trading after the homebuilder has swung to a loss for its fiscal second quarter of $1.31 billion, or $4.14 per share. With the continued housing slump, the company took hefty charges to write down the value of its inventory. Revenue plunged to $1.62 billion from $2.62 billion a year ago.
Fannie Mae (NYSE: FNM) shares are slumping over 9% this morning after the mortgage lender said it lost $2.2 billion or $2.57 a share in the first quarter due to mounting home-loan delinquencies as the housing slump continued. The results were below, far below that of estimates.
Vodafone Group (NYSE: VOD) said Tuesday that it's signed an agreement with Apple Inc. (NASDAQ: AAPL) to sell the iPhone in ten of its markets including Australia, the Czech Republic, Italy and India.
MOST NOTEWORTHY: Yahoo!, Cigna and Aegean Marine were today's noteworthy upgrades:
Citigroup upgraded shares of Yahoo! (NASDAQ: YHOO) to Buy from Hold as they believe Microsoft (NASDAQ: MSFT) is unlikely to walk away from Yahoo! and that there is potential Microsoft could bid $34/share.
Credit Suisse upgraded Cigna (NYSE: CI) to Outperform from Neutral citing the company's favorable business mix.
Stephens upgraded shares of Aegean Marine (NYSE: ANW) to Overweight from Equal Weight on valuation as they see an attractive entry point at current levels.
OTHER UPGRADES:
JMP Securities raised D.R. Horton (NYSE: DHI) to Strong Buy from Outperform and Pulte Homes (NYSE: PHM) to Outperform from Market Perform.
MOST NOTEWORTHY: Suntech Power, Premier Exhibitions and the Homebuilders Sector were today's noteworthy initiations:
Citigroup named Suntech Power Holding (NYSE: STP) their top pick for China solar due to its leading scale and technology roadmap for higher cell efficiency, initiating shares with a Buy rating and $55 target.
Merriman believes Premier Exhibitions (NASDAQ: PRXI) can move to the $14.50-$17.00 through the continued monetization of the company's current tours, the launching of additional tours and the value of the Titanic artifacts on hand. The firm started shares with a Buy rating.
Wal-Mart Stores Inc. (NYSE: WMT) will open its first in-store medical clinics under its own brand name, The Clinic at Wal-Mart, as a joint venture with local hospital systems in Atlanta, Dallas and Little Rock, Ark., starting in April.
Unilever (NYSE: UL) on Thursday reported a 65% drop in fourth-quarter net income to 721 million euros after selling its European frozen-food business. However, comparable sales growth showed a nice rise. Revenue at Unilever rose 2% to 9.89 billion euros and underlying sales growth was 6.1% during the quarter, with pricing contributing three percentage points to the underlying sales growth. Analysts had expected a profit of 693.5 million euros on sales of 9.95 billion euros.
D.R. Horton (NYSE: DHI) swung to a fiscal first-quarter loss of $128.8 million, or 41 cents a share, with revenue falling to $1.71 billion from $2.8 billion. The quarterly results included $245.5 million in charges. Shares are up nearly 1% in premarket trading.
TechCrunch is reporting this morning an unconfirmed rumor that either Google (NASDAQ: GOOG) or News Corp. (NYSE: NWS)'s MySpace is about to announce a big $1-1.5 billion acquisition in the social space. TechCrunch has come to a conclusion that the most likely candidate is Bebo. Again - unconfirmed rumor and Bebo is the speculation of the guys at TechCrunch.
1. Expect the unexpected: Neither the Giants winning or the low 17-14 final score was expected in the least (Bull markets can't last forever, stocks DO NOT always trend higher over time)
2. Never trust "experts:" Ex-Giant and "football expert" Tiki Barber was dead wrong when he retired one season too soon while trashing his former teammates and coaches in order to get attention (Don't listen to "market experts" when they make predictions like Apple (NASDAQ: AAPL) $300 and Google (NASDAQ: GOOG) $1,000 to get attention)
3. The acknowledged best are not always the best performers: Patriots quarterback Tom Brady, the league MVP, got outplayed by oft-criticized Eli Manning (just because hugely successful companies like Microsoft (NASDAQ: MSFT), General Electric (NYSE: GE) and Goldman Sachs (NYSE: GS) are leaders in their fields does not mean their stocks will outperform lesser quality rivals)
4. Past performance is not indicative of future returns: For the season, the Patriots came in undefeated, the Giants had lost six games (Wow, this standard SEC disclaimer is actually right on the money for once!)
TheStreet.com's Jim Cramer says it's still too early to get contrarian about the universal negativity on retail.
Squeeze?
DuPont (NYSE: DD) (Cramer's Take) better than expected. Countrywide (NYSE: CFC) (Cramer's Take) puts up numbers that don't seem bankruptish. We could have a day's respite from the gloom. We certainly are owed one, at least in Nasdaq land.
Plus, when you go out with people from the trading desks, you are overwhelmed by the negativity.
Last night at a buy-side/sell-side dinner, a smart guy I know who loves the short side tried to make a case for some down-and-out airlines and retailers. He's a price guy, meaning that he believes everything has a price and that you have to start looking at a Lowe's (LOW) here or a Macy's (M) because if you start buying now, put some on, you will be getting a pretty decent risk-reward ratio.
I thought people were going to throw things at him. He was immediately ridiculed as someone who didn't understand what's out there, the collapse of consumer spending as evidenced by Brinker's (NYSE: EAT) (Cramer's Take) Chili's, AT&T (NYSE: T) (Cramer's Take), Family Dollar (NYSE: FDO) (Cramer's Take) and all of the other usual suspects Tuesday.
For Hovnanian, which today reported a fourfold increase in its fourth-quarter loss, times are going to be especially hard. The New Jersey company is selling off property at a furious pace, reducing its total land position by 47%, and will cut it further next year, according to Chief Financial Officer J. Larry Sorsby. During the fourth quarter, land sales rose to $64.15 million compared with $41.3 million a year earlier. Homebuilding revenue fell to $1.3 billion. Obviously, that's a not a situation that's sustainable for a company whose business is selling homes, not selling land. Shares of Hovnanian are down $2.09, or 24%, at last check to $6.45.
DR Horton Inc. (NYSE: DHI) shares are rising this morning on news that the Bush administration is working behind the scenes with the home-lending industry on a plan to extend lower, introductory interest rates on home loans. Treasury Secretary Henry Paulson with loan servicing companies and other industry executives yesterday to come up with a loan modification plan in the wake of the subprime crisis. No formal agreement was announced, but an agreement could be be revealed in the next week or two. Also helping the situation are comments from Fed Chairman Ben Bernanke, who hinted at further rate cuts in December. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on DHI.
After hitting a one-year high of $31.13 in February, the stock hit a one-year low of $10.15 on Tuesday. DHI opened this morning at $10.78. So far today the stock has hit a low of $10.77 and a high of $11.99. As of 10:55, DHI is trading at $11.97, up $1.50 (14.3%). The chart for DHI looks neutral and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
TheStreet.com has a great piece comparing Apple Inc.'s (NASDAQ: AAPL) iPhone with other alternatives in the market. While mostly the iPhone is found to be the most intuitive, the one minus is the email it seems. Also, Fortune has a piece on the power of Apple's founder and CEO, Steve Jobs. In premarket trading, Apple shares reached $175 -- have you read Georges Yared's post and bought before?
Dell Inc. (NASDAQ: DELL) chose retailer Carrefour Group to be the first European mass merchandiser to sell Dell notebook and desktop computers in its 365 stores in France, Belgium and Spain beginning in January.
Sirius Satellite Radio Inc. (NASDAQ: SIRI) said that Ford Motor Co. (NYSE: F) may have its satellite radio services in approximately 70% of Ford and Mercury 2009 vehicles next year.
Even after all the recalls there are a slew of toys that are going to be hot sellers this year. See what toys the are and where you can get them for less money.
Credit-card issuers are trying a new tack to build loyalty among cardholders who know they can maximize benefits by using one at the grocery store and another at the gasoline pump. The plan: more flexibility and payment choices.
Yes, America needs a recession. Bernanke and Paulson won't admit it. And investors hate them. We're all trapped in outdated 1990s wishful thinking about a "new economy" and "perpetual growth."
It used to be heiresses just lunched, shopped and partied. Don't tell the $20 billion babies on Forbes' list of the 20 Most Intriguing Billionaire Heiresses, who defy the stereotype of the bon-bon popping princess thanks to achievements in business, sports and the arts.
Want an Armani cell phone? Nokia's very cool 8800 Sirocco? Well fughedaboutit. These are among hot cell phones that you cant get in the U.S. See other phones you can't here and see why the mobile phone you want exists somewhere other than the
Dogfish Head: Brewing Up Relationships
The beermaker employs an off-center approach to everything, including its flavors, grassroots marketing, and wacky promotions.
U.S. stock futures are indicating the market may be poised for a rally today as the mood on Wall Street change direction due to upbeat results from Hewlett-Packard and hopes of a Federal Reserve rate cut following the recent markets' declines. Yet, the mood may yet change as some housing data is due out an hour before the opening bell as are earnings from Freddie Mac.
[Update: Following the wide loss reported by Freddie Mac, stock futures, while still very much positive, are beginning to lose some ground].
Yesterday, U.S. stocks plunged with the Dow Jones Industrial Average losing 218 points, or 1.66%, ending below 13,000 following a Goldman downgrade of Citigroup, Lowe's profit warning and more losses due to subprime exposure, this time at Swiss Re. The Nasdaq Composite dropped 43 points, also 1.66%, and the S&P 500 declined 25 points, or 1.75%.
This morning, at 8:30 a.m. EST, October housing starts and building permits are due. Both are expected to further decline. At 2:00 p.m., the latest FOMC meeting minutes will be released.
TheStreet.com's Jim Cramer explains what could force the Fed to cut rates again.
The housing index just can't rally for a minute. The thing's amazing. The stress of the system is so clearly manifested by this that I have to wonder if the Fed wants this index lower.
Many of these firms lent money recklessly. Are the Fed heads thinking these companies need to pay like the New Centurys and the NovaStars (NYSE: NFI) (Cramer's Take) did? (Are the feds, by the way, thinking that this GMAC company has to go because that was a huge provider of crummy mortgages?)
TheStreet.com's Jim Cramer says our problems are so widespread, he sees lots more IndyMacs before we're out.
.gif){kind=logo}
.gif){kind=logo}
1. Expect the unexpected: Neither the Giants winning or the low 17-14 final score was expected in the least (Bull markets can't last forever, stocks DO NOT always trend higher over time)
For homebuilders like 
Check your bank's safety rating
Crocs shares tank on updated guidance
Earnings preview: Does Kraft have the recipe for a successful quarter?
