Last week’s trading might have been a bell weather for whether the market thinks the worst is behind some of the troubled financial institutions. But, as The Wall Street Journal pointed out, the number of variable rate subprime loans which will reset in 2008 has a total value of $362 billion.
Wall St. does not like the odds an improvement in the environment. It traded Countrywide Financial (CFC) down another 22% during the week, and Citi (C) another 10%.
As news hits the market about worsening numbers for mortages, it is safe to assume that the value of the pools of related instruments could take a sharper dive than they have already.
Citi is still in trouble and Countrywide may not make it.
Douglas A. McIntyre
