Subprime Zombies

Yesterday was Halloween, but the zombies are still out and about today in the market. Sub prime zombies feed on rate cuts. If they do not get at least 50 bps at a time the zombies come out and feast on companies like ABK, MTG, PMI, RDN, etc. It looks like they are done feasting for today, but I am sure that they will get hungry again in the next few days/weeks/months. Mortgage resets tend to add to their hunger as well.

What Is In Store For Today?

What will the master of disaster say?????

The price action in MTG, PMI, RDN, and TGIC will be totally based off of what CFC says today before the opening bell. It looks like they are all going to pop, and catch a lot of shorts off guard.



CFC was a loan originator for 2.5% of all mortgages.

If they offer any good news (they are masters at making up BS) expect these stocks to bounce. They are all oversold right now, and most will eventually go bankrupt. Almost nothing, except for New Century Financial (NEW) goes straight down to 0.

What they said:

Countrywide loses $1.2 Billion

"But the Calabasas, Calif.-based company said it will be profitable in the current quarter and in 2008, as it restructures its business to take advantage of the current market."

Honestly, I do not believe that they are going to just waltz right on through with only one quarter of loss. This is the biggest credit bubble in history, and I think that they are going to suffer along with everyone else. After all, most of the mortgage resets have not even hit yet.