More Pounding for Stocks

Every day it just seems to claim another victim. Today, it was Wells Fargo, which announced a $495 million writedown due to mortgage loans. The continuing crisis still centers around banks and major financial institutions, though Countrywide Financial (CFC), which today lost another 1.16 points to close at a multi-year low of 12.21, could be said to be the poster child of the housing collapse in America.

Countrywide was the largest loan originator in the USA through most of the boom years from 2003-2006, and they also were the most aggressive in originating exotic loans and repackaging them for sale to investors as SIVs (Structured Investment Vehicles). Hedge funds ate them up, though now, most of these investments have gone totally sour, many worth fractions of their original values, and many may be worth just pennies on the dollar when the truth of their toxicity is made known.

Through 2005-2006, Countrywide wrote one out of every 7 mortgages in America, so if there's any one company responsible for the continuing crisis, it is Countrywide, and their over-tanned leader, Angelo Mozilo, who as recently a two weeks ago was still selling his shares as the stock price cratered.

Mozilo also masterminded the stock buyback program when Countrywide was at its peak this past summer, at upwards of $40 per share. In less than six months, the stock has lost 70% of its value and there's no bottom in sight.

Countrywide continues to borrow at short rates higher than what they lend long term, in hopes that they can make up for the massive weight of defaults with new originations, though the mortgage business has shown a steady decline in volume over the past year and especially over the past two months.

Dow 13,110.05 -120.96; NASDAQ 2,618.51 -25.81; S&P 500 1,451.15 -19.43; NYSE Composite 9,652.52 -156.63

As far as today's trading was concerned, it was another day of disappointment for the bulls, as the markets sold off broadly in afternoon action. Advancers were overwhelmed by declining issues, by a ratio of better than 3-1. New lows expanded their advantage over new highs, 530-92. All told, it was another rout. Any vestiges of the bull market have been eviscerated and there's concern over the upcoming holiday shopping season as retailers brace for what figures to be a competitive race to the bottom, with margin-eroding sales events the key for many.

In commodities, oil fell another 66 cents to $93.43, while gold was routed, down $27.40 to $787.30 and silver lost 58 cents to $14.48. Once again, the gold trade may have been the result of institutional selling in a scramble for cash.

As I close out here very late in the evening (12:10 am), the Nikkei and Hang Seng indices are sharply lower. The Hang Seng is being particularly brutalized, down more than 1100 points, nearly 4%. Trading in New York resumes in just over 9 hours. Better get some shuteye, because tomorrow promises to be another rambling ride down.

NYSE Volume 3,982,506,500
NASDAQ Volume 2,351,474,250