CK Finance

CIT (CIT) says talks with government have ceased, and that it's been told there's no appreciable likelihood of support in the near term. Board and management are "evaluating alternatives." Trading in CIT halted late in the session.

Amazing the gov't did the right thing this time. At least they can stand by their "too big to fail" argument this time around.

15 Stocks You May Want to Keep Out of Your Portfolio

Ford has negative stockholder's equity of $17.6b. That means if you liquidated the company today, you would owe at least that much (likely more since a number of long term assets are probably at inflated values).

I agree the company is enjoying stronger sales given their position as the only automaker not to have been bailed out. The question we have to ask is whether they will be able to generate enough profit to first pay back their liabilities, before they can even begin to reward shareholders.

Now that Chrysler & GM have gone through bankruptcy, it seems they have a lower cost structure. Ford will have to compete against the lower cost structure and I'm not sure how long its status as 'last survivor' will allow it to enjoy more sales, especially if it continues to report losses every quarter.

Why AT&T Is a Strong Growth Story

I think everyone has made valid points. I would only add a few small points:

- AT&T and Verizon are the big winners from the 700 MHz Spectrum. I'm sure this will be a big area of growth for both of them in the future.

- Analysts Estimate AT&T Growth in the next 5 years to be 3.71% (Yahoo Finance). Sure AT&T is losing revenue from landlines, but I think they have the right momentum to achieve better. Like all have pointed out, losing iPhone exclusivity would really hurt though. I would watch out for one of two things next year - lower margins or lower wireless growth. Apple will either squeeze out a better deal for themselves or simply open the iPhone to all carriers. It's obvious who has more to gain from the exclusivity arrangement.

- Dividend payout at 75% of net income seems high, but if you look at AT&T's cash flow statement, you see they are generating a ton of operating cash, particularly from depreciation. It's management's decision whether to reinvest the cash from depreciation back into the business or to return it to shareholders if they have no better use for it. Either way I would say they have quite a lot of room to maneuver with such significant positive cash flow. Key here will be whether it's sustainable; I would say it certainly is right now and will of course monitor as the situation changes.

Priceline: Stock Price Is Likely to Fall

I don't follow Priceline closely, but isn't the company like a 'Wal-Mart' for travel? Overall travel spend is down due to tightening of the consumer wallet, but wouldn't that make consumers look for better deals?

I expect Priceline market share to increase as consumers search for low prices, but don't know how that will be counterbalanced by a further downturn in the travel industry. Until I have a better picture, I probably won't open a short position.

What do you think?

The WSJ digs deep into data from 30 million loans and sees that - much more than subprime terms, rate resets or liar loans - low- or no-money down loans, leading to upside-down owners, are chiefly responsible for the foreclosure crisis. (See chart.) Since late 2006, most foreclosures have come on homes with prime loans.

Negative equity makes up 35.3% of foreclosures based on that chart. Given housing prices are still deteriorating, I bet it will continue to be the primary reason for foreclosures going forward.

Example: Bank of America had $70b in home equity loans on its balance sheet in 2005 and by the end of 2008, it was $152.5b. That's $80b in home equity loans in the past 3 years. I bet a lot of these were written when house prices were at their peak, with homeowners' taking out home equity loans to encash their original down payments and spend away. Given house prices have dropped nearly 40% nationwide, you can only wonder how much of that $80b will be foreclosed simply due to walkaways from negative equity.

Why Investors Should Short Comerica

Without access to information that isn't available in publicly available financial reports, all investors can do is make assumptions.

All I am doing is pointing out a few key points:

1. More than $7.5b loans were originated in the last 4 years. Housing prices are already at 2004 and earlier levels right now and still falling - It's up to you to judge how that will impact CMA's loan portfolio. I don't think it's unrealistic to see 20% loss on loans originated since 2004, but would be pleased to hear arguments on why this may not the case.

2. They are not writing new loans - You can see for yourself by looking at their balance sheet. Their net interest margin will continue to be squeezed given these two factors and earnings will continue to deteriorate.

3. Additional bailouts from the Gov't through the Capital Purchase Program (CPP) will further strain earnings. Consider that preferred dividends cost 5% even though their loans only yield 3.7% (before cost of funding). The only alternative is conversion of preferred to common shares, which results in share dilution.

If the company's loan portfolio starts to show improvement, I will be happy to give them credit and close my short position. I will watch their delinquency pipeline and closely as information is released.

I appreciate everyone's feedback.