Futures have continued to deteriorate on additional losses being reported. Barclays (BCS) disclosed write downs due to mortgage / sub prime issues. JC Penney (JCP) issued a warning on their Q4 earnings. They lowered their sales expectations for the next quarter on substantial lower sales. JC Penney is essentially the first major retailer to come out and say they are expecting a poor holiday shopping season. Expectations from other retailers will likely follow suit in time. Here in the pre market it appears to be another bad day shaping up with housing, retail, sub prime losses all at the center of it.
Last night I discussed the companies MBIA and Ambac, today we have a news bite on those very two companies I discussed:
Bloomberg reports The crisis of confidence in bond insurers that bestow top credit ratings on debt sold by borrowers from the New York Yankees to Citigroup may cost investors as much as $200 bln. The AAA ratings of MBI, ABK and their five smaller competitors are being reviewed by Moody’s Investors Service and Fitch Ratings. Without guarantees, $2.4 trillion of bonds may fall in value and some issuers would get shut out of the capital mkts. The ratings cos said, FGIC in New York, and CIFG Guaranty of Hamilton, Bermuda, have a high or moderate chance of being told to add capital or forfeit their top status. Fitch and Moody’s said MBI has a low risk of a downgrade
Capital preservation… again, remains top priority.
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