BloggingStocks

Cramer on BloggingStocks: When the bottom comes, you'll know it

Jim Cramer — 2008-07-02T09:22:00+00:00

Filed under: Market matters, Citigroup Inc. (C), JPMorgan Chase (JPM), Bank of America (BAC), CIT Group (CIT), Countrywide Financial (CFC), Wachovia Corp (WB), Wells Fargo (WFC), Cramer on BloggingStocks

From TheStreet.com Network

TheStreet.com's Jim Cramer says it'll be a huge, bizarre investment that sticks -- not a bid for Wachovia.

Why is there so much chatter about Wachovia (NYSE: WB) (Cramer's Take) getting a bid? Why do people think that its deposit base is worth the heartache of dealing with its mortgage portfolio?

We have all heard the chatter about a potential bid for Wachovia, and it sure would be sweet, because the stock has been one of the worst of the group. It doesn't have a CEO, so that fits the scenario of a company that could be for sale. The franchise was always a solid one until now. And I will admit that the secret to the bulls' case for a better second half is a bid for Wachovia, a premium bid that takes everyone's breath away and causes a short panic.

My problem is that if you wanted to buy Wachovia, why not wait? What's the hurry? Is it that you might miss a chance at a bottom? Is there someone else out there who might want it? Do you perceive a bidding war, for instance, between JPMorgan (NYSE: JPM) (Cramer's Take) and Wells Fargo (NYSE: WFC) (Cramer's Take) for WB? How about USB (NYSE: USB) (Cramer's Take)?

You see, the issue here is that no matter how low the common stock goes, without some guarantees from someone or an ability to be able to offload those bad mortgages to a Lone Star like CIT (NYSE: CIT) (Cramer's Take) did, I just don't see any way around the possibility that you wreck your own company by taking them on.

When the book is written on this era, I believe we will look back and say, "Oh my, it was such an obvious bottom, everyone was short, there was no hope and then __________ happened." That blank will be the unknown that I believe we are not yet ready for and have not seen enough punishment to have the luxury of getting. I mean that. There are still too many people talking about value in the financials. I am confident about what it will not be: "JPM bought WB at a huge premium." Just like it wasn't when Bank of America (NYSE: BAC) (Cramer's Take) bought Countrywide (NYSE: CFC) (Cramer's Take). And it wasn't when JPM bought Bear.

What it will be is a discrete event or a big investment from left field that actually makes sense and holds. No outside investor has yet been able to be a profitable bottom-caller. Anyone who is buying WB now must be hoping that there is something out there.

In 1990 when Citigroup (NYSE: C) (Cramer's Take) got the big investor from Saudi Arabia, you knew it -- you knew that things were going to be fine. But you had so much more going for you than you have now: a compliant Fed, an economy that was about to get better, a government that was not only NOT laissez-faire but was extremely aggressive in attempting to fix the problems.

We are so far from that now it is scary. So I say wait.

You won't miss much. And you could lose tons if you act now.

Random musings: Doug Kass is a great short-seller, so when he calls a bottom for the year , you'd better listen. He will be right if Wachovia gets a bid this weekend!

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.

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Florida joins Countrywide Financial-suing bandwagon

Zac Bissonnette — 2008-07-01T11:59:00+00:00

Filed under: Countrywide Financial (CFC), Housing, Recession

If pretty much every other attorney general in the country was suing Countrywide Financial (NYSE: CFC), would Florida's? Apparently. Last night the Associated Press reported that Florida Attorney General Bill McCollum has sued the company for misleading and unfair trade practices.

There's no question that Countrywide is a horrible company on a multitude of levels, but there's some irony to the allegations that the company took advantage of borrowers. Take a look at the chart for the company's stock price over the past 5 years -- how much worse would it have done if they'd treated people ethically? It's a little bit like finding out that career minor leaguer Manny Alexander was a steroid user.

In some ways the beat down on Countrywide seems unfair, more of a response to general market problems than anything else. Countrywide helped people use toxic mortgages to buy homes they couldn't afford at a time when lenders were operating on the assumption that home values always went up, interest rates never did, and everything was comin' up roses. It was a happy conspiracy and, sure, Countrywide was happily working on loans that were fraudulent -- but everyone knew the subprime game was the wild west and no one cared. Towns benefited from increased property taxes and federal loan programs encouraged home buying with little money down. But with a lot of people angry about losing their homes, these lawsuits are good politics in an election year.

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Smart bond plays, retiring on a shoestring & top kitchen values - Today in Money 7/1

Allan Halprin — 2008-07-01T08:59:00+00:00

Filed under: Microsoft (MSFT), eBay (EBAY), Starbucks (SBUX), Ford Motor (F), General Motors (GM), XM Satellite Radio (XMSR), Sirius Satellite Radio (SIRI), Money and Finance Today, Anheuser-Busch Cos (BUD), Countrywide Financial (CFC), United Parcel'B' (UPS)

In the News:

· Stocks Look Weak at Start of First Day of 3Q

· EBay Ordered to Pay Louis Vuitton, Fendi & Others Millions for Knockoff Sales

· InBev to Continue Pursuit of Anheuser-Busch

· Florida Sues Countrywide Over Mortgages

· General Motors Stock Hits 54-Year Low

· Wilbur Ross Says Run-Up in Oil Prices Is a Bubble

· UPS Pilot Rescues Debilitated Farmers

· Microsoft's Plan B for Search

· Starbucks Makeover Isn't Going Well

· Could a Ford, Chrysler Merger Be in the Making?

· Cable, Satellite Customer Satisfaction Falls, Poll Finds

· Howard Stern May Have a Sirius Dilemma As Company Looks to Cut Costs

Bonds: Smarter Plays for Darker Days
Thinking of Treasuries or other fixed-income plays as the stock market sinks? Here's what to look for.
Bonds: Smarter Plays for Darker Days - BusinessWeek

Who's Minting the Most Millionaires? Not the U.S.A.
A new survey finds when it comes to minting the wealthy, India and China now outpace the U.S. which isn't even in the top 10 anymore. Other countries also outpacing America include Brazil, Korea, Indonesia, Slovakia, Singapore, UAE, Czech Republic and Russia.
A Millionaire Boom In The East - Forbes.com

How to Retire on a Shoestring
You often have to be a little frugal to make a retirement budget work. The $27,798 median income for American households headed by someone 65 or older doesn't offer much breathing room when gas, groceries, and out-of-pocket healthcare costs all are conspiring to make retirement more difficult. Here are eight ways to stretch your retirement dollars.
8 Ways to Stretch Your Retirement Dollars - US News and World Report
In the News: Retirees Downsizing Their Dreams

Top Kitchen Values
You can create a great kitchen by following advice from Consumer Reports' experts and from 8,000 readers who told us about their remodeling projects. Plus, seven mini makeovers for less than $5,000.
ConsumerReports.org - Kitchen values: secrets of a successful remodel

Best Light Ice Creams
Fat might be bad for you, but it sure tastes good. Consumer Reports sampled 10 light ice creams, and even among these more healthful options, the two with the most fat and calories were the winners in our best light ice creams ratings.
ConsumerReports.org - Best light ice creams

Top Airport Bars
The good news in travel? It's easier than ever to drown your sorrows at the airport with a nice glass of wine, an artisan beer, or a good cocktail. Here are a host of upscale new drinking establishments which means business travelers no longer have to languish at dreary, dingy airport bars.
Booze at Airports - Business Travel Column - Joe Brancatelli - Seat 2B - Portfolio.com

Strategic Flying Maneuvers
Major airlines are reinstating minimum-stay requirements. Here's how to get around them.
Getting Around Airlines' New Minimum-Stay Requirements - SmartMoney

Secrets of a Millionaire Matchmaker, For Free!
Men hate short hair," says Patti Stanger, CEO and owner of The Millionaire's Club, and star of the hit Bravo series The Millionaire Matchmaker. Oh yeah, apparently women are not too fond of small-time earners, either. What do you mean you don't have $50,000 to get your dating life going? Well, at least MainStreet has some secrets from the Millionaire Matchmaker free of charge.
The Secrets of The Millionaire Matchmaker, For Free! | MainStreet

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Countrywide CEO Angelo Mozilo gets emotional -- the male Tammy Faye?

Zac Bissonnette — 2008-06-30T18:03:00+00:00

Filed under: Bank of America (BAC), Countrywide Financial (CFC)

In the days leading up to its acquisition by Bank of America (NYSE: BAC), Countrywide Financial (NYSE: CFC) founder and chief value destroyer Angelo Mozilo is getting emotional. Business Week reports that the man whose tan makes George Hamilton look like Casper "choked up" at the company's annual meeting to approve the deal. In an emotional speech, Mozilo described his love of the organization he'd built and described his tears as a "drawback of being Italian."

Let's see: Mozilo sold hundreds of millions of dollar in stock at several times the current price, and will now walk away from battered shareholders with a bloated net worth resulting from horrific corporate governance, leaving Bank of America to deal with the shareholder lawsuits and attorneys general investigations into the company's practices.

Remember Tammy Faye's tearful interviews after her televangelist collapsed amid revelations of extramarital affairs and air-conditioned doghouses? It might not be quite as pathetic, but Mozilo is one of the few people who can give the late Ms. Faye a run for her money in the unsympathetic display of emotion department.

I somehow doubt that shareholders were moved by Mozilo's speech, which was delivered in a shareholder meeting free of a question and answer session, marked by an overwhelming security presence reflecting the number of people who hate Mr. Mozilo.

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Cramer on BloggingStocks: The path ahead is down

Jim Cramer — 2008-06-27T09:19:00+00:00

Filed under: Ford Motor (F), General Motors (GM), Market matters, Citigroup Inc. (C), Anheuser-Busch Cos (BUD), Bank of America (BAC), Merrill Lynch (MER), Countrywide Financial (CFC), Wrigley, (Wm) Jr (WWY), Wachovia Corp (WB), Washington Mutual (WM), Cramer on BloggingStocks

From TheStreet.com Network

TheStreet.com's Jim Cramer says with few exceptions, the landscape is littered with corpses.

Sell everything. Nothing's working. Revisit when the prices are adjusted for a big recession, soaring inflation and a crushed consumer. Sell at 12,000 and come back at 10,000. Even better: short it.

Are you going to argue with any of that? Do you have a case against it? What's the counter? Takeovers? We've had a couple: Anheuser-Busch (NYSE: BUD) (Cramer's Take), Wrigley (NYSE: WWY) (Cramer's Take). Good if you owned them.

Lower rates? Can the Fed help? We assume the Fed is done. The odds favor higher rates. Bank turnarounds? How, with short-rates going up? With housing prices going down?

Can oil go down? Only with a worldwide crash, and with a worldwide crash, why would we come back at 10,000?

Can the consumer get more liquid? How? Unemployment's going higher. Wages won't go up in that environment.

That's the environment. It's pretty bulletproof when it comes to its logic.

In fact, there's really only one thing that could be wrong with it. EVERYONE AND HIS BROTHER BELIEVES IN IT. It is the most consensus of consensus views.

Sometimes the consensus is dead right: Housing's been going down and everyone knows it's going down, and it keeps going down.

I have said the same thing about Citigroup (NYSE: C) (Cramer's Take) and Wachovia (NYSE: WB) (Cramer's Take) and Washington Mutual (NYSE: WM) (Cramer's Take) and Bank of America (NYSE: BAC) (Cramer's Take) -- cut the dividend already! -- and GM (NYSE: GM) (Cramer's Take) -- cut the dividend again already! -- and Ford (NYSE: F) (Cramer's Take). That's been right. That's worked.

So you can't just say the consensus is wrong.

The negativity coming into today's session is as thick as I can recall nearing most short-term bottoms. The issue is there is not enough fear out there. Despite the consensus, which obviously creates a need for lower prices before it is worth buying, there isn't a big spike in the VIX, there isn't a gap down, or a crescendo of selling. There isn't even any volume. So while the bearishness is real thick, the selling isn't. (Bloomberg had an excellent piece on this yesterday, noting how much lower the VIX was than at other bottoms.)

I think we lack a climax because we haven't had a climax, some session where people can say, "I don't care how much lower GM goes, I know it is a buy." Same with Citigroup.

That's because unlike most other times in the stock market, the stocks of big companies that are cascading all need capital, and the companies themselves aren't selling anything off except common.

Merrill Lynch (NYSE: MER) (Cramer's Take) should have sold Bloomberg. It is not a core asset. It should have sold its BlackRock (NYSE: BLK) (Cramer's Take) stake. It can make it without it. But no ... nothing.

Citigroup has a lot of core assets, but I now believe that the management of that place is so screwed up it's not redeemable anymore. They just need a 20% Saudi investor. Bank of America will now have to start the process of being the nation's largest mortgage lender in a nation that doesn't have much buying to do. Maybe that will change next year, but by then I suspect the federal government or these state governments will have wiped out Countrywide (NYSE: CFC) (Cramer's Take), which surely would been out of business if BAC had stepped away. The mistakes here have been catastrophic. So what if Wachovia or Washington Mutual have great deposit bases? We know in the end that the FDIC will have to act to protect them and then we will find out what Sheila Bair is made of. I figure she's like everyone else that has surfaced in finance with the feds (except Bob Steel) -- an empty suit.

In the meantime, I cannot disagree with the statement at the top of this piece, except for where it comes to commodity companies that sell into China -- they are the bull market. Anyone who thinks they have to go down too is not in keeping with the way the market works: there's always something that works, it is just the volume of it may be so small that it doesn't matter. That's where we are right now.

All my indicators say that it is extremely dangerous to short here: oscillators, attitudes, polls. They haven't worked either -- or yet. I think the palpable gloom simply does one thing -- it'll be a stair-step down rather than a cascade, where you can make a little money when you are on the stair but then give it back on the next step, until we get to some level that better reflects a GM bankruptcy or a Citigroup collapse, one or the other, or both.

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.

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Countrywide's (CFC) Mozilo passed out loans like candy

Douglas McIntyre — 2008-06-27T09:06:00+00:00

Filed under: Management, Law, Countrywide Financial (CFC)

Angelo Mozilo, CEO of Countrywide (NYSE: CFC) may be a thug and he may get in trouble with federal authorities due to the way he ran his company. But at least he was generous.

According to The Wall Street Journal, everyone from casino employees to retired pro athletes got sweet deals. The paper writes that, Mr. Mozilo regularly lined up loans for people he met, according to several current and former Countrywide executives. Said one: "Angelo would call in and say, literally, 'My maid needs a loan.'"

Mozilo even gave a loan to the buyer of hockey player Wayne Gretsky's home.

The big open question about these mortgages is whether the people could have gotten them in the normal course of business, or was Mozilo's help necessary. He also may have made certain that his pals got below market rates.

Based on most of what has come out about Mozilo's behavior, he should probably give back those tens of millions of dollars in cash he got from stock options.

And perhaps, spend a few years in the pen.

Douglas A. McIntyre is an editor at 247wallst.com.

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The barbecue at Countrywide turns into a forest fire

Douglas McIntyre — 2008-06-26T14:06:00+00:00

Filed under: Deals, Law, Bank of America (BAC), Countrywide Financial (CFC)

More states have filed charges against Countrywide (NYSE: CFC) for aggressive marketing and giving loans which were highly risky. Washington and California have joined Illinois in the actions.

Up until now, Bank of America (NYSE:BAC), which is buying Countrywide, has been sticking to its story that it will close on its purchase of the mortgages company. The media has written a million times that the big money center bank might pull out of the deal. That actually became a bit more likely with the new states' actions.

According to The Wall Street Journal, Kurt Eggert, a law professor at the School of Law at Chapman University said, "Countrywide could be required to give back its profit on all those loans and conceivably give back houses on which it has foreclosed." Since that number could be well into the billions of dollars, the potential damages are rising fast.

Countrywide could spend tens of millions of dollars on legal fees and countless hours in court over the next several years. That has become much clearer in the last few days.

BAC would be better off to let CFC go out of business and just buy its assets. Maybe the bank never intended to close the deal. Maybe that was its plan all along.

Douglas A. McIntyre is an editor at 247wallst.com.

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Illinois goes after Countrywide (CFC) and CEO Angelo Mozilo

Douglas McIntyre — 2008-06-25T08:35:00+00:00

Filed under: Law, Employees, Countrywide Financial (CFC), Housing

Angelo Mozilo's nine lives may be about to run out. So far the CEO of Countrywide (NYSE:CFC) has avoided the most severe taint from the collapse of his mortgage company and its questionable practices.

The State of Illinois, the land of Lincoln, will bring civil charges against Mozilo and the firm he started. According to The Wall Street Journal, In a draft of the complaint, Illinois alleges that the company engaged in "unfair and deceptive practices" in the sale of mortgage loans.

One of the main pieces of the complaint is that mortgage brokers pushed loans on people, even it they could not afford them.

Of course, as is always true with charges bought by attorneys general, there is some politics behind the claim. There have been a number of Countrywide foreclosures in the Illinois.

To some extent the politics do not matter. Based on other investigations of Countrywide, it appears that management did quietly push its people to move loans out like cars off an assembly line.

What is most troubling is that no one in government anywhere caught onto the practice earlier.

Douglas A. McIntyre is an editor at 247wallst.com.

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Before the bell: Futures higher ahead of data, Fed

Melly Alazraki — 2008-06-25T07:42:00+00:00

Filed under: Before the bell, Earnings reports, Market matters, Bank of America (BAC), Countrywide Financial (CFC), General Mills (GIS), Economic data, Barclays plc ADS (BCS), Oil, Federal Reserve

U.S. stock futures were higher Wednesday morning, ahead of several economic reports and the Federal Reserve's policy statement on interest rates. While trading might be affected by the upcoming economic data, the real test will be in early afternoon, when Fed chairman Bernanke will read the policy statement. Some on Wall Street believe a strong statement could help markets recover.

U.S. stocks ended lower on Tuesday, as markets just couldn't pull it together ahead of the Federal Reserve rate decision. Combine that with worries over the economy, oil, struggling financials and the the Dow industrials fell another 34 points, or 0.29%, the Nasdaq Composite 17 points, 0.73%, and the S&P 500 3 points, or 0.28%.

At 8:30 a.m. EDT, the first economic reading of the day will be reported -- May durable goods orders. At 10:00 a.m., May statistics for new home sales is due out. Neither are likely to show any improvement in their respective sectors.

Then, at 10:30 a.m., weekly crude inventories will be released. Lately, this statistic has affected oil prices more than it once did. While the report may show diminishing supplies, it could also show lessened demand.

The biggest event of the day will then come at 2:15 p.m. EDT, when Bernanke will read the Fed's policy statement. No action on interest rate is expected, but a shift in focus where the Fed considers inflation as a risk to the economy rather than slow growth. This could be a signal for future rate hikes.

In corporate news, Barclays Plc (NYSE: BCS) plans to sell 4.5 billion pounds ($8.9 billion) of stock to boost capital depleted by credit-related writedowns. Barclays rose as much as 6.4%in London trading, the biggest gain in two months.

Countrywide Financial (NYSE: CFC) shareholders are scheduled to vote on the proposed Bank of America (NYSE: BAC) buyout Wednesday morning. Since it's a stock deal, the originially $4 billion buyout is now valued around $2.8 billion. Also, Illinois' attorney general plans to sue Countrywide Financial, saying it used 'deceptive' lending practices to sell risky loans.

General Mills (NYSE: GIS) reported a 17% decline in its fiscal fourth quarter profit due to commodity hedging costs. Still, its revenue came in above the Street's expectations on strong sales of its yogurt, cookie mixes and Cheerios.

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Option Update: Bank of America volatility up; purchase of CFC on July 1

Paul Foster — 2008-06-20T09:33:00+00:00

Filed under: Bank of America (BAC), Countrywide Financial (CFC), Options

Bank of America (NYSE: BAC) closed at $28.14 Thursday.

BAC aims to complete its planned acquisition of Countrywide Financial (NYSE: CFC) on July 1. BAC announced in January of 2008 the planned acquisition of CFC for 0.1822 per share of BAC for each share they own, $5.13 based on BAC closing share price of $28.14. CFC closed at $4.83.

BAC July option implied volatility of 51 is above its 26-week average of 40 according to Track Data, suggesting larger price fluctuations.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Cramer on BloggingStocks: JP Morgan made a huge mistake

Jim Cramer — 2008-06-20T08:57:00+00:00

Filed under: Industry, Market matters, JPMorgan Chase (JPM), Bank of America (BAC), Merrill Lynch (MER), Countrywide Financial (CFC), Goldman Sachs Group (GS), Wachovia Corp (WB), Washington Mutual (WM), Lehman Br Holdings (LEH), Stocks to Sell, Cramer on BloggingStocks

TheStreet.com's Jim Cramer says the acquired Bear Stearns portfolio is worth even less than he thought.

How bad was that Bear Stearns portfolio? I am beginning to believe that JPMorgan's (NYSE: JPM) (Cramer's Take) buy of Bear is looking like a big mistake. It can only be justified by what might have been an even bigger problem for JPM -- the collapse of the trades that Bear made, which were being processed by JPM's clearing.

We are now beginning to get a real sense of the worthlessness of the mortgage portfolios. Not that we got any help from the SEC, which has taken a "we don't care what's in the mortgages as long as you tell us you have mortgages" attitude. That's been worthless for investors, and maybe even for JPMorgan.

The losses now exceed $400 billion, according to my modeling (if you simply assumed that 50% of the exotic mortgages that were issued from 2005 to 2007 eventually went into default). That's amazing, but it looks like I dramatically underestimated the losses. UNDERESTIMATED!

The most egregious issuers of these exotic mortgages were Bear, Merrill Lynch (NYSE: MER) (Cramer's Take) and Lehman Brothers (NYSE: LEH) (Cramer's Take). I believe that JPM has taken in a huge number of uninsurable, non-hedgeable mortgage instruments that are a pure write-off. And that means they are probably underwater on everything they took in.

Worse still, judging by the Goldman Sachs call (NYSE: GS) (Cramer's Take), JPMorgan didn't pick up much from the point of view of clearing and prime brokerage. I am really worried JPM got nothing from this deal.

JPM is adamant that it got a lot out of the deal, which would imply that I am totally wrong. I can't buy that. Sorry. Not after what we have seen from the other companies that have similar vintages.

Second, it's a really bad sign for the next shotgun acquirers. Without insurance from the government for all of these bad portfolios, it simply isn't worth it to call the government and say "I want Nat City (NYSE: NCC) (Cramer's Take)," or "I want Washington Mutual (NYSE: WM) (Cramer's Take)."

It also makes me think that Countrywide Financial's (NYSE: CFC) (Cramer's Take) balance sheet will really impair Bank of America (NYSE: BAC) (Cramer's Take). And I simply don't have any idea how Wachovia (NYSE: WB) (Cramer's Take) can make it in its current form.

Everyone is way too bullish on these companies. They should all be sold. Period.

Random musings: It is time to reassess the negative view of gold. The Fed isn't tightening, which is what caused gold to go down. That was a canard. The reversal in these banks is no doubt freaking the Fed out. The idea of raising rates takes away the one reason why you would want to invest in banks: the yield curve allowing the banks to refinance. That logic is sheer lunacy.

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RELATED LINKS:
Bolling: After Lehman Call, Bet on GS, JPM
Cramer: Bear Arrest Could Scare Hedge Funds Straight
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long Goldman Sachs.

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Thornburg, mortgage giant, may not make it

Douglas McIntyre — 2008-06-19T13:23:00+00:00

Filed under: Earnings reports, Deals, Bank of America (BAC), Countrywide Financial (CFC)

Thornburg Mortgage (NYSE:TMA) was one of the larger mortgage lenders in the US. Its stock now trades at $.65, down from almost $27 a year ago. That means it market cap was $5 billion then.

According to The Wall Street Journal, TMA said in a federal filing that "the future of the home-mortgage finance company as a viable business remains in doubt." The company is trying to raise over $1.3 billion, but, by many accounts, that is not going well.

One of the issues that the Thornburg problems opens, again, is why Bank of America (NYSE:BAC) is so anxious to buy Countrywide (NYSE:CFC). While the largest mortgage lender may have problems which are not quite as severe as Thornburg's, it still faces a growing number of customer defaults.

Many on Wall St. would argue that Countrywide would trade well below its current price of $4.67,down from its 52-week high of $38.89, if BAC had not made its offer. It has traded as low as $3.95. CFC has had trouble with regulators, write-offs and in being probed for its lending practices.

Could Countrywide have fallen below $1 if it did not have a firm buy-out offer? Certainly.

Douglas A. McIntyre is an editor at 247wallst.com.

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California bankin' with Wachovia

Todd Harrison — 2008-06-17T15:42:00+00:00

Filed under: Countrywide Financial (CFC), Wachovia Corp (WB), Washington Mutual (WM), Housing

Minyanville's wise professor, Mark Bloudek, dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit www.minyanville.com.

I've been doing precious little in this market, but one stock I've been tracking closely is Wachovia Corp. (NYSE: WB). Why would I pay more mind to Wachovia than to other banks? Because it bought Golden West Financial in May of 2006 for $25 billion. And where did Golden West have most of its exposure? That's right, California.

Last night I was looking through the median home price data in the Multiple Listing Service (MLS) in various California cities and noticed some shocking price drops. The median home price offers in San Francisco dropped $10,000 in one week. Ditto for Orange County. In Los Angeles, the figure was a startling $13,000. I went back to check when the market topped in these areas and found that every one of them peaked in -- drum roll, please -- May of 2006.

When the mortgage crisis first started, the theme I used to locate short opportunities was California exposure. Two companies that came to mind in the early days were Washington Mutual (NYSE: WM) and Countrywide (NYSE: CFC).

In terms of identifying a trading opportunity, the question with Wachovia is, how much has been priced in since declining precipitously from early May? And can Wachovia remain a standalone bank in the face of rapidly declining asset (read: home) prices in California after its acquisition of Golden West? Finally, is Wachovia the weakest of the big banks?

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Angelo Mozilo's loans to friends: the real story

Zac Bissonnette — 2008-06-16T11:22:00+00:00

Filed under: Scandals, Countrywide Financial (CFC), Politics

The Wall Street Journal reports (subscription required) that "Dealings with Countrywide Financial Corp. (NYSE: CFC) are becoming a liability in political circles."

Democratic Senator Kent Conrad of North Dakota is donating $10,500 to Habitat For Humanity, in a nice gesture designed to compensate for the fact that he received a loan under special terms from Countrywide -- part of a program at the company known as F.O.A., meaning friends of Angelo Mozilo, the company's CEO.

Barack Obama advisor James Johnson resigned from the campaign after the media reported that he had received a special loan, and Senator Chris Dodd has come under fire for something similar.

Political corruption is one thing and, as political corruption goes, this hardly seems worth noting, especially in the current climate. But it hasn't gotten any attention as a corporate governance matter, and it should. Angelo Mozilo was paid hundreds of millions of dollars to run Countrywide Financial and he appears to have used shareholder assets to give special deals to his friends. If he wanted to give gifts to friends, he should have done it with his money.

Is it material? No, probably not. It's just more evidence of the fact that Angelo Mozilo ran the company as a personal fiefdom -- the opposite of the way a public company should be run, but not much different from the way most probably are.

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Cramer on BloggingStocks: When banks won't buy banks

Jim Cramer — 2008-06-13T09:40:00+00:00

Filed under: Deals, Market matters, JPMorgan Chase (JPM), Bank of America (BAC), Countrywide Financial (CFC), Washington Mutual (WM), Cramer on BloggingStocks

TheStreet.com's Jim Cramer says that rather than merging, these banks will have to raise money through dilutive offerings.

The big difference between 1990s bank implosion and this one is that nobody at other banks sees any value in owning the ones that are faltering.

Key (NYSE: KEY) (Cramer's Take) is the latest example. Key's everywhere, it is grandfathered to be in every state. You would think there was some bank out there that would want it. Nope. No one. So they have to do this down round that destroys the common. Nobody wants Sovereign (NYSE: SOV) (Cramer's Take) either. Or Nat City (NYSE: NCC) (Cramer's Take). Or Washington Mutual (NYSE: WM) (Cramer's Take). The latter's really interesting now that Hudson City (NYSE: HCBK) (Cramer's Take) has passed it in market size because it says that all of those branches and all of that deposit base just doesn't mean anything. Or worse, the losses are so bad that unless the Fed takes the losses and puts them on its balance sheet, there can be no consolidation.

Yet consolidation is the only way to go. Now, we are much more laissez-faire then we were in 1990. The administration then felt engaged to move quickly to set up mergers instead of the charade of down rounds. I call them charades because none of them yet has produced a return for anyone who has put the money up.

Bank of America's (NYSE: BAC) (Cramer's Take) Countrywide (NYSE: CFC) (Cramer's Take) charade is the biggest of all. I make it 50-50 that CFC brings down BAC. I am not kidding. That's how badly that deal was thought out and how much bad product there is on CFC's books.

Bear wasn't a bank. Its failure was about counter party risk, basically whether Bear could take down JPMorgan (NYSE: JPM) (Cramer's Take), which was on the hook for the other side for a bunch of Bear trades, plus the Bear portfolio, which I am told was the worst of the worst.

Banks, on the other hand, do have worthwhile deposit bases. You can see that if the Resolution Trust for mortgages had been set up, the mergers would have occurred already with the surviving bank coming out strong and the defaults on the Fed's balance sheets.

Without it we are Japan, keeping everyone afloat.

I expect many more Key banks. The only way out of this jam right now is to hope that the value funds don't have their money taken away through horrid performance.

Then we will be okay. But it will be elongated and stubborn and not nearly done as we still don't know what properties were insured by insurance that is running out, and we don't know HELOC dispersal and losses by geography and vintage.

Too many wide open questions. Just think about who is the next Key and you won't make a mistake next time.

Random musings: Doug's dead right about Lehman's prospects as he has been all along.

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RELATED LINKS:
The Five Dumbest Things on Wall Street This Week: June 13
Key Takes a Charge, Raises Capital
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.

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Cramer on BloggingStocks: An awful moment might offer some buys

Jim Cramer — 2008-06-12T09:33:00+00:00

Filed under: Deals, Market matters, Anheuser-Busch Cos (BUD), Federal Natl Mtge (FNM), Countrywide Financial (CFC), Amer Intl Group (AIG), Washington Mutual (WM), Lehman Br Holdings (LEH), Stocks to Buy, Stocks to Sell, Cramer on BloggingStocks, Potash Corp. of Saskatchewan (POT)

TheStreet.com's Jim Cramer says the market's a mess, but the S&P oscillator and buyout offers could give an opportunity for trades.

Here we are again. Another unfathomable moment to buy stocks.

You have the financials just falling apart at the seams.

Oil and the grains are out of control.

The Fed chairman and the Treasury secretary have declared the worst is over even as we await the demise of a half-dozen banks, and we question the solvency of Fannie Mae (NYSE: FNM) (Cramer's Take) and Freddie Mac (NYSE: FRE) (Cramer's Take). The only stocks working are Mosaic (NYSE: MOS) (Cramer's Take), Agrium (NYSE: AGU) (Cramer's Take), Potash (NYSE: POT) (Cramer's Take) and a handful of natural gas companies.

It's crazy out there.

And yet my best indicator, the Standard & Poor's oscillator, which you can order from their Web site, is saying you cannot be short here and should be doing some buying. The oscillator, when it has been at minus 5, has called a bottom almost every time in the last decade, plus or minus a day or two, and a percent or even two, and I have long since learned not to see through it.

Look, let's be honest. It is almost impossible to be bullish here. There's nothing good happening at all. But I can make a valuation case for much of this market because of that. Of course, it is anecdotal, but consider today's news story about Anheuser-Busch (NYSE: BUD) (Cramer's Take). Sure, the $46.4 billion bid is a 35% premium to the 30-day average, as the Journal points out, but InBev is buying this worldwide company for a song relative to five years ago because of the weak dollar.

There are so many BUDs out there that you have to ask whether we couldn't see more of them. We have had a couple. I expected a torrent and I haven't gotten it. But the point is larger: stocks are cheap, and in euro or yen or zloty or whatever terms, they are dirt-cheap.

No, I am not foolish enough to "like" this market. I am saying I respect my oversold indicators. And I am going to put my spare cash that I have in Action Alerts PLUS -- and I have been raising cash -- to work today and tomorrow because of that oscillator.

Random musings: Obama adviser story says it all about both FNM and Countrywide (NYSE: CFC) (Cramer's Take), two total ne'er-do-wells. ... If Lehman (NYSE: LEH) (Cramer's Take) catches a bid today, the market will rock. That's become the key stock. ... Washington Mutual (NYSE: WM) (Cramer's Take) and AIG (NYSE: AIG) (Cramer's Take) boards will be sued, I predict, if they keep these menaces at the helm. ... The CSX (NYSE: CSX) (Cramer's Take) ruling bugs me. If they violated the law, why not just stop them? But Judge Kaplan's real smart, so he must know what he is doing.

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RELATED LINKS:
Anheuser-Busch Shares Frothy on Bid News
How Oil and Water Futures Affect Ag Stocks
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.

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Cramer on BloggingStocks: Questions swirl around Lehman's capital raise

Jim Cramer — 2008-06-09T09:00:00+00:00

Filed under: Market matters, JPMorgan Chase (JPM), Bank of America (BAC), Merrill Lynch (MER), Countrywide Financial (CFC), Wachovia Corp (WB), Washington Mutual (WM), Lehman Br Holdings (LEH), Stocks to Buy, Stocks to Sell, Cramer on BloggingStocks

TheStreet.com's Jim Cramer says that with this bank going back to the well, there are too many questions to risk buying in this space.

Why doesn't Lehman (NYSE: LEH) (Cramer's Take) raise $15 billion? Or $20 billion. How about $30 billion?

Would it then not have to come back to the market? Maybe for $40 billion we could lose what has become a cancer on the market.

The question we all must ask this morning is how bad are the portfolios that these firms are stuck with, and how bad is every attempt to undo them? Where did they come from? Who put them into these bonds? Which clients dumped them on Lehman? Who allowed this? Have they been fired? Why did the firm exude any confidence? Why did it hold on to this stuff for so long? How undercapitalized was it really?

All of these things spring to mind because the previous capital raise, the preferred raise, clearly meant nothing. No more than the raises that Merrill (NYSE: MER) (Cramer's Take) has done and will no doubt have to do more of.

It's the denials that get me. Or the "soft denials," the ones that tell us, "Look, things are fine." Because that's all quicksand.

Here's the rub with this era. Everyone who has been in trouble stays in trouble. Bank of America (NYSE: BAC) (Cramer's Take), with its ludicrous buy of Countrywide (NYSE: CFC) (Cramer's Take), that could actually sink this great bank; Wachovia (NYSE: WB) (Cramer's Take); National City (NYSE: NCC) (Cramer's Take); Washington Mutual (NYSE: WM) (Cramer's Take). They are all still in need of capital. Because if you are a regulated business, you can't hedge this stuff properly and you need to raise capital, and no one wants these bonds -- whatever the heck's in there -- so more money needs to be raised.

We have lacked any transparency about what's in these portfolios. We don't know what JPMorgan (NYSE: JPM) (Cramer's Take) bought from Bear. We don't know what Lehman owns. 2006 California HELOC? Brokered loans from Novastar? Fremont General no-doc paper? How bad can it be? We don't have a clue.

We do know that there are $480 billion in losses written off and we are still nowhere, including Lehman.

So, these "fund raisings" mean nothing to me.

Here's the new rule of thumb I am using: If an institution needs capital, sell it. Let the dumb institutional and mutual fund chumps do the buying. I can't find a single one of these infusion situations that doesn't need more infusions. Why be a banking piñata?

Beats the heck out of me.

RELATED LINKS:

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.

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Countrywide chief gave out special mortages

Douglas McIntyre — 2008-06-07T13:40:00+00:00

Filed under: Deals, Management, Scandals, Bank of America (BAC), Federal Natl Mtge (FNM), Countrywide Financial (CFC)

Almost everyone believes that Countrywide Financial (NYSE: CFC) CEO Angelo Mozilo is a thug. But, it turns out he is a smart one. Some fairly powerful people got special loans from his company. They were often people Mozilo needed as pals.

According to The Wall Street Journal (subscription required), "These borrowers, known internally as 'friends of Angelo' or FoA, include two former CEOs of Fannie Mae, the biggest buyer of Countrywide's mortgages."

Two of the people involved were James Johnson, who does some work for Barack Obama, and Franklin Raines, who had some scandal problems before he left Fannie Mae (NYSE: FNM).

Since Countrywide had business dealings with Fannie Mae, the whole deal looks a bit tawdry.

No one knows whether these loans will cause legal problems for any of the parties involved. But, it does, once again, raise the question of the wisdom of Bank of America (NYSE: BAC) buying a company with such an ugly past and so many chapters of less-than-ethical behavior.

Perhaps no one cares about the ethics part if there is money to be made.

Douglas A. McIntyre is an editor at 247wallst.com.

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Before the bell: Futures lower ahead of payroll report

Melly Alazraki — 2008-06-06T07:44:00+00:00

Filed under: Before the bell, Earnings reports, Forecasts, Deals, Market matters, Bank of America (BAC), Countrywide Financial (CFC), Amer Intl Group (AIG), Economic data, Oil, Lehman Br Holdings (LEH), Housing, Federal Reserve

Stock futures were mixed early Friday as oil prices spiked to levels not seen in a week on fears the dollar would weaken further. Investors are also awaiting May's payroll numbers.

U.S. stocks staged a big rally Thursday, ending a three-day losing streak as the Dow climbed over 200 points. Better-than-expected initial jobless claims data and strong sales from several retailing giants namely Wal-Mart Stores Inc. (NYSE: WMT) helped boost sentiment. The Dow Jones Industrial Average ended climbing up 213.79 points, or 1.73%, the S&P 500 gained 26.85 points, or 1.95%, and the Nasdaq composite finished 46 points, or 1.87%, higher.

At 8:30 a.m. EDT, the government will release the non-farm payroll report for May. Economists expect a loss of 60,000 jobs in May according to Briefing.com. Unemployment rate is expected to increase to 5.1% from 5% the month before. Hourly earnings are expected to show an increase of 0.2%. While the expected numbers show continued deterioration of the labor market, despite wages increasing at a lower rate than inflation so far, some could expect a surprise since the ADP report had relatively good numbers. The market will react to the report.
At 10:00 a.m., April wholesale inventories are also due for release.

Meanwhile, oil prices rose back above $130 a barrel, following the biggest single day price rise ever in dollar terms, a gain of $5.49 Thursday. The spike on Thursday came after ECB president said the bank might raise interest rates, which would of course weaken the U.S. dollar.

Meanwhile, home foreclosures soared to a new record.

In corporate news, the Federal Reserve has approved Bank of America Corp. (NYSE: BAC)'s $4 billion purchase of distressed mortgage lender Countrywide Financial Corp. (NYSE: CFC).

The Securities and Exchange Commission is investigating whether American International Group Inc. (NYSE: AIG) overstated the value of credit default swaps linked to subprime mortgages. A criminal investigation could follow, the Wall Street Journal reported.

And staying in financials, Lehman Brothers Holdings Inc. (NYSE: LEH) may pre-announce what may be its first quarterly loss since going public in 1994 as early as next week and it may raise as much as $5 billion also by early next week.

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Ed McMahon faces Countrywide foreclosure

Zac Bissonnette — 2008-06-04T11:08:00+00:00

Filed under: Countrywide Financial (CFC), Housing

With Jose Canseco firmly established as the least likable foreclosure victim, Ed McMahon might be the most sympathetic of the celebrity foreclosure candidates. The Wall Street Journal reports (subscription required) that long-time Johnny Carson straight man Ed McMahon "faces the possible loss of his Beverly Hills home to a foreclosure action initiated by a unit of Countrywide Financial Corp. (NYSE: CFC)."

As of February 28th, McMahon was $644,000 in arrears on a $4.8 million loan backed by the home. The six-bedroom house has been on the market for 2 years but the recent price reduction hasn't attracted a buyer.

Just when you thought Countrywide couldn't sully its reputation any further, the company might take Ed McMahon's house. And it gets worse. According to his spokesman, the 85-year old hasn't been able to work because he broke his neck in a fall 18 months ago.

What's next? CEO Angelo Mozilo accidentally sending a rude emai to a borrower who had the nerve to contact him in search of help? Oh wait, he already did that.

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