The bad news buyers were all over Wachovia (WB) today. The stock was about 10% down at one point is now about 10% up. The market is apparently cheering the dividend cut and job cuts. Bank of America (BAC), the second biggest US bank is up another 7% at one point today after reporting yesterday it may not guarantee $38.1 billion of Countrywide Financial Corp.’s debt after taking over the mortgage lender. “There is no assurance that any such debt would be redeemed, assumed or guaranteed,” the bank said in an April 30 regulatory filing.
The short squeeze in Fannie Mae (FNM) and Freddie Mac (FRE) may be over although both are significantly higher than the morning lows. What is American Express (AXP) going to do for an encore? Wachovia (WB)? Citigroup (C)? Washington Mutual (WM)? Lehman (LEH)? Wells Fargo (WFC)?
Wells Fargo “beat the street” last week only because it made a policy change to write off home equity loans after 180 days instead of 120 days? What’s next Wells Fargo, 210 days? Wachovia now effectively has no dividend. Can it go negative? Citigroup wants to sell $500 billion in assets. To who? At what price? Other than eliminating its dividend inquiring minds are asking “Then what?” Every company above is already hiding ever increasing amounts of garbage in level 3 “marked to fantasy” assets. Will investors overlook this forever? More
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July 22nd, 2008 at 5:42 pm
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