Worldwide Mortgage Losses $250-$300 Billion
Posted by admin under: Main Feb 11
Bear Stearns analyst Jonathan Golub said in a research note to clients that he expects total worldwide economic losses related to the U.S. mortgage crisis to range from $250 billion to $300 billion.
Additionally, Golub believes S&P’s 500 financials will be hit with $125 billion to $175 billion in mortgage and other credit-related writedowns.
Since the third quarter, S&P financials have lost a whopping $593 billion in market capitalization while earnings estimates have been cut by $138 billion as a result of the current negative environment, he added.
Losses from financial giants such as Citigroup, Bear Stearns, and Merrill Lynch have wiped roughly $61 billion from S&P 500’s overall profit during the fourth quarter.
According to Thomson Financial, about 60 percent of S&P 500 companies beat fourth-quarter Wall Street expectations, 14 percent met them, and 27 percent missed targets, up markedly from the typical 20 percent seen in prior years.
While much of the crisis has been realized domestically, Golub believes that Europe is yet to show the extent of its losses in relation to the crisis, but noted that in doing so it shouldn’t cause “widespread panic” for U.S. entities.
“Our sense is that European financial institutions are well behind their U.S. counterparts in recognizing likely losses. We also believe that European analysts have been slower to downwardly revise their earnings estimates,” Golub wrote in a note to clients.
As I mentioned in a previous post, annual performance of mortgage related stocks, many financials have lost 50 percent or more of their share price over the last 52 weeks, with downward pressure still remaining.
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Source: Worldwide Mortgage Losses $250-$300 Billion
Monday, February 11th, 2008 at 11:05 pm and is filed under Main. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.