With Washington Mutual coming out after the market announcing divvy cut and funds raising as well as shacking staffs, the subprime issue will not go away and a 0.5 rate cut tonight has likely to be factored in.
The Dow has very strong 4 days and if we're going to have a X'Mas rally, you think a bit of a pull back before hand. So possibly buy on rumour and sell on fact when rate cut announces.
I am looking for a short play at the open and 6700 would be nice.
WaMu slashes dividend, plans to raise $2.5 bln Company ends subprime mortgage lending; to lay off more than 3,000 By Alistair Barr, MarketWatch Last update: 4:55 p.m. EST Dec. 10, 2007Print E-mail RSS Disable Live Quotes SAN FRANCISCO (MarketWatch) -- Washington Mutual Inc. said late Monday it will slash its dividend, raise $2.5 billion in new capital and end subprime mortgage lending as the company tries to adjust to the credit crisis. The dividend will drop to 15 cents a share from 56 cents a share, while the sale of convertible preferred stock will raise $2.5 billion, the lender said. WaMu (WM:Washington Mutual Inc News, chart, profile, more Last: 19.88+0.85+4.47%
4:33pm 12/10/2007
Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: WM 19.88, +0.85, +4.5%) said it will stop lending through its subprime mortgage channel; close roughly 190 of its 336 home loan centers and sales offices; shut down nine home loan processing and call centers and cut about 2,600 home loan positions and 550 corporate and support employees. The reductions will cost $140 million in the fourth quarter, but will lower non-interest expenses by about $500 million next year, WaMu said. WaMu is a leading mortgage lender that was deeply involved in the subprime part of the business. The company originated more than $26 billion subprime home loans in 2006, according to industry newsletter Inside Mortgage Finance. As delinquencies and foreclosures surged this year, WaMu has been hit hard. The lender's shares have dropped more than 55% so far in 2007. "A substantial infusion of new capital, significant expense reductions, the major change in our home loans business, and our planned dividend reduction all combine to further fortify WaMu's strong capital and liquidity position," Chief Executive Kerry Killinger said in a statement. The share sale and the dividend cut will generate roughly $3.7 billion of tangible equity, the company noted. Fitch Ratings downgraded WaMu to A- and warned that it could cut again. WaMu becomes the latest lender to get out of the subprime mortgage business. The company said on Monday that it will now focus on offering home loans directly to more creditworthy customers through its retail branch network. The disruptions in the mortgage market will likely mean that national mortgage originations slump 40% to $1.5 trillion in 2008, the company estimated. Mortgage losses will also likely remain high, WaMu said. Fourth-quarter provisions for loan losses will be $1.5 billion to $1.6 billion. Provisions will rise to a range of $1.8 billion to $2 billion in the first quarter of 2008. "The first quarter range reflects the company's current view that prevailing adverse conditions in the credit and housing markets will persist through 2008," WaMu said. "The company also currently expects quarterly loan loss provisions through the end of 2008 to remain elevated." Alistair Barr is a reporter for MarketWatch in San Francisco. Companies in this story Washington Mutual Inc (WM)
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Ha! I wonder how many of those 3000 laid off by WAMU will result in mortgage loan defaults?
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