Countrywide e-mail snafu angers borrowers

The chairman of beleaguered Countrywide Financial Corp. raised eyebrows and tempers with his snippy reply to an e-mail plea from a man who said he was in danger of losing his home.

"Disgusting," Angelo Mozilo wrote in his inadvertent reply to an e-mail from Daniel Bailey Jr. who had asked the company to modify terms of his adjustable-rate mortgage.

Bailey said he didn't fully understand the terms, was wrongly told he could refinance after a year and was on the verge of losing his home of 16 years because of unaffordable payments.

Bailey's e-mail went to 20 Countrywide addresses. He used language from a form letter on the Web site LoanSafe.org, which offers advice to borrowers in trouble.

Countrywide said mass e-mails have flooded its inboxes and disrupted operations.

"This is unbelievable," Mozilo wrote Tuesday. "Most of these letters now have the same wording. Obviously they are being counseled by some other person or by the Internet. Disgusting."

Mozilo apparently clicked "reply" instead of "forward," sending his comments back to Bailey.

Flame war: Bailey posted the response on a LoanSafe forum, touching off a furor on housing Web sites.

A comment posted on loanworkout.org said Mozilo's e-mail was "a perfect example of the 'help' they can expect to receive when contacting their lenders."

Another comment on the Web site read: "If borrowers want the freedom to take out credit for hundreds of thousands of dollars, they are equally responsible to not sign something they don't understand."

Late Tuesday, Countrywide issued a statement saying the company and Mozilo "regret any misunderstanding caused by his inadvertent response to an e-mail by Mr. Bailey. Countrywide is actively working to help borrowers like Mr. Bailey keep their homes."

Last week, a federal judge ruled that a shareholder lawsuit against Mozilo and other Countrywide (CFC, Fortune 500) executives and directors should go to trial. The plaintiffs claim the top officials failed to provide enough oversight of the lender and misled shareholders about the company's true financial state.

According to congressional figures, Countrywide lost $1.2 billion in the third quarter of 2007 and another $422 million in the fourth quarter as the subprime mortgage crisis hit. The company's stock fell 80% between February and the end of the year.

During the same period, Mozilo received a $1.9 million salary. He also received $20 million in performance-based stock awards and sold $121 million in stock.

Stocks slump on oil surge, day 2

Stocks tumbled Wednesday, falling for a second session, after oil prices topped $133 a barrel and the Federal Reserve gave a gloomy economic outlook.

The Dow Jones industrial average (INDU) lost 227 points, or 1.8%. The broader Standard & Poor's 500 (SPX) index fell 1.6%, while the tech-heavy Nasdaq composite (COMP) lost 1.8%.

Stocks fell in the morning as oil prices spiked on a weaker-than-expected weekly supply report. But the selloff accelerated in the afternoon following the 2 p.m. ET release of the minutes from the last Fed meeting.

Included with the minutes was the Fed's 2008 forecast, which spooked investors.

"Most of the selling is about oil," said Timothy Ghriskey, chief investment strategist at Solaris Asset Management. "We've all been surprised that the steady march up in crude hasn't impact the stock market more before now."

Ghriskey said that there were also technical factors stemming from the recent rally that made it likely stocks would see a correction. "And the Fed minutes and forecast didn't help," he added. "They basically indicated that the Fed is on hold right now."

Thursday morning brings the weekly jobless claims report and a speech from Federal Reserve Governor Randall S. Kroszner on the outlook for the mortgage markets.

Oil hits new record: U.S. light crude oil for July delivery set a closing record of $133.17 in New York Mercantile Exchange trading, up more than $4 a barrel - and then proceeded to march to another record intraday high of $134.10 in electronic trading after the settlement.

Oil prices spiked after the weekly inventories report showed a surprise drop in crude and gasoline supplies and a weaker-than-expected buildup in distillates, used in heating oil.

Oil has been climbing lately amid ongoing supply concerns and the weakness in the dollar, which makes dollar-traded commodities such as oil less expensive.

Gas hits 14th straight record: The national average price for a gallon of regular unleaded gas rose to a record $3.807 from the previous day's high of $3.80, according to AAA.

Company news: Time Warner (TWX, Fortune 500), the parent company of CNNMoney, will receive a $9.25 billion dividend as part of its legal and structural separation from Time Warner Cable.

After the close Tuesday, Hewlett-Packard (HPQ, Fortune 500) reported a small rise in quarterly profit that matched preliminary figures it announced last week. Shares fell 3.6% Wednesday.

In addition to HP (HP), AIG (AIG, Fortune 500), Alcoa (AA, Fortune 500), American Express (AXP, Fortune 500), Boeing (BA, Fortune 500), Citigroup (C, Fortune 500) and JP Morgan Chase (JPM, Fortune 500) were among the other big Dow losers.

The only Dow gainers were the oil components, Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500).

AMR (AMR, Fortune 500) shares slumped 24% after its American Airlines unit said it was cutting capacity by 11% to 12% in the fourth quarter due to record-high oil prices. Other airline stocks slipped as well, with the Amex Airline index losing almost 12%.

Intuit (INTU), the maker of tax preparation software, reported higher quarterly sales and earnings late Tuesday that topped estimates. The company also forecast full year sales and earnings that are above current expectations. Shares advanced 3.4% Wednesday.

Market breadth was negative. On the New York Stock Exchange, losers topped winners seven to three on volume of 1.39 billion shares. On the Nasdaq, decliners beat advancers by over two to one on volume of 2.22 billion shares.

Other markets: The dollar fell versus the euro and yen.

Treasury prices slumped, raising the yield on the 10-year note to 3.81% from 3.77% late Monday. Bond prices and yields move in opposite directions.

U.S. to suspend oil reserve shipments

The government said Friday that it would halt deliveries to the strategic oil reserves in July, a move many lawmakers have been calling for in an attempt to boost oil supplies and bring down gas prices.

Oil prices eased a bit from pervious highs, but still settled at a new closing record of $126.29 a barrel as Saudi Arabia rejected a plea from President Bush to boost production and Goldman Sachs revised their price outlook sharply higher.

The U.S. Energy Department announcement comes several days after Congress voted to direct the Bush administration to stop the shipment of oil to the emergency reserves.

The Energy Department decided not to purchase oil for the reserve from July to December in case the bill becomes law, said Megan Barnett, a spokeswoman for the department.

The Strategic Petroleum Reserve, located underground at four sites in the salt caverns bordering the Gulf of Mexico, was built in the 1970s after the first oil embargo to protect the country against a sudden drop in oil supplies.

The Bush administration has been filling the reserve since 2001, boosting the reserve from about 540 million barrels to 702.7 million, enough to protect against a disruption in imports for about 58 days, said Barnett.

Barnett remained skeptical of the halt's effect, saying deliveries to the strategic reserve accounts for "less than one tenth of one percent" of the oil on the market.

"The amount of oil put in the SPR last week... we trade that in less than one minute," said Tom Kloza, the Oil Price Information Service's chief oil analyst.

But supporters say halting shipment to the reserve could bring down gas prices by as much as 24 cents a gallon.

Saudi Arabia rebuffs Bush: Earlier on Friday, oil had risen more than $3 a barrel as Saudi Arabia rejected President Bush's call to increase production, saying there wasn't enough demand from its customers.

Bush met with Saudi Arabia's King Abdullah on Friday as part of his Middle East tour to appeal for greater production to help quell crippling fuel prices.

According to the Associated Press, Saudi oil minister, Ali al-Naimi, said the kingdom decided on May 10 to raise production by 300,000 barrels, at the request of customers, and that increase was sufficient.

"Supply and demand are in balance today," he told a news conference. "How much does Saudi Arabia need to do to satisfy people who are questioning our oil practices and policies?"

Some analysts have attributed the recent surge in oil prices to fears about future oil supplies, not a current supply shortage. They say there won't be enough oil in a few years to satisfy soaring worldwide demand.

Crude began to rise early Friday after traders foresaw a jump in diesel fuel use following the earthquake in China and Goldman Sachs revised its price outlook sharply higher.

Oil prices: U.S. crude for June delivery rose $2.17 a barrel to settle at $126.29 a barrel on the New York Mercantile Exchange, a new closing record. That topped the previous closing record of $125.96, set May 9.

Crude also hit a new intraday record of $127.82, topping the previous intraday record of $126.98 set May 14.

"Everything the market looks at is bullish," Peter Beutel, an oil analyst at Cameron Hanover, wrote in a research note Friday.

Also pushing up prices Friday were fears of higher demand from China. Traders fear that the rebuilding after the 7.9 magnitude earthquake that rocked southwest China Monday - and killed more than 20,000 people with tens of thousands of others still missing - will lead to a sharp increase in diesel fuel use, the Associated Press reported.

Rocketing fuel: Diesel fuel has been in tight supply for the past several months following a cold winter in the Northern Hemisphere, and as the popularity of diesel cars grows in Europe and the developing world.

With diesel prices outpacing gasoline, refiners in the United States have been ramping up production of diesel and sending it abroad. That has displaced some domestic gasoline production, helping push gas prices higher.

The price of diesel fuel hit a new record high Friday of $4.482 a gallon, according to a daily survey from AAA. Regular unleaded gasoline also reached a new record of $3.787 a gallon.

Goldman Sachs weighs in: Also contributing to Friday's oil price spike: analysts at the investment bank Goldman Sachs boosted their oil price predictions for the second half of the year from $107 to $141 a barrel.

"Supply constraints continue to push crude prices higher," Goldman analysts wrote in a research note Friday.

But the bank noted that despite the high prices, the global economy - and by implication, the demand for oil - continues to grow.

"The dire macroeconomic impact from the current oil shock has yet to materialize," the note said.

Stocks recover poise after slipping

Stocks were mixed Friday, with the S&P 500 managing to eke out a multi-month high, despite record oil and gas prices and a weak consumer sentiment index.

The Dow Jones industrial average (INDU) lost a few points. The broader Standard & Poor's 500 (SPX) index inched higher, ending at its highest point since Jan. 3. The Nasdaq composite (COMP) slipped 0.2%.

Stocks rose through most of the week, with the S&P 500 ending Thursday's session at a more than 4-month high.

But after such a run, stocks retreated a bit Friday, as record commodity prices revived fears about how inflation will hit an already weakened consumer and U.S. economy. That runup overshadowed any relief about a better-than-expected housing market report.

"We had some decent news this morning on the housing front, and the economic and earnings news all week hasn't been bad," said Ron Kiddoo, chief investment officer at Cozad Asset Management. "But you've got oil up a couple of dollars today and it's also a Friday, so you're seeing a little selling."

Economic news: April new-home construction rose to a seasonally adjusted annual rate of 1,032,000, the government said. That topped economists' forecasts, thanks to apartment construction. But the single-family housing start measure, considered to be key, fell to another 17-year low.

Building permits rose to a seasonally adjusted annual rate of 978,000, also topping forecasts. (Full story).

The University of Michigan's consumer sentiment index for May fell to 59.5 from 62.6 in the previous month, versus forecasts for a drop to 62.

Treasury Secretary Henry Paulson, speaking Friday afternoon, said he expects to see the pace of U.S. economic growth pick up by the end of the year.

Meanwhile, the United Nations warned the world economy could see a severe downturn, with growth of just 1.8% expected this year, as a result of the U.S. housing and financial market bust. (Full story).

Company news: General Electric (GE, Fortune 500) said it is looking to get out of the appliance business, confirming reports Thursday that speculated a sale price in the $6 billion range. (Full story).

Yahoo responded late Thursday to activist shareholder Carl Icahn's plan to unseat the Internet firm's board and push through a deal with Microsoft (MSFT, Fortune 500), essentially holding its ground. Yahoo (YHOO, Fortune 500) shares were barely changed Friday. (Full story).

A number of retailers reported better-than-expected earnings, including Abercrombie & Fitch (ANF), Nordstrom (JWN, Fortune 500) and Kohl's (KSS, Fortune 500). Abercrombie shares were flat, Nordstrom shares rose and Kohl's shares fell.

On the upside, the spike in oil prices boosted oil services stocks, including Exxon Mobil (XOM, Fortune 500), Chevron (CVX, Fortune 500) and Marathon Oil (MRO, Fortune 500).

The Amex Oil index jumped 2.7%.

Market breadth was mixed. On the New York Stock Exchange, winners beat losers on volume of 1.31 billion shares. On the Nasdaq, decliners beat advancers 4-to-3 as 2.29 billion shares changed hands.

Commodity prices: U.S. light crude oil for June delivery rallied $2.17 to close at a record $126.29 a barrel on the NYMEX, after hitting an all-time electronic trading high of $127.82 earlier. Prices briefly came off the highs after the United States said it will suspend shipments to the Strategic Oil Reserves, starting in July. However, analysts say the move will have little impact on oil and gas prices.

The national average price for a gallon of regular unleaded gas rose to a record $3.787 from $3.776 the previous day, according to AAA. It was the 9th record in a row.

COMEX gold for August delivery rose $20 to settle at $904.10 an ounce.

Other markets: The dollar fell versus the euro and yen.

Treasury prices were little changed, with the yield on the 10-year note at 3.84%, roughly where it stood late Thursday after having fluctuated through the session. Bond prices and yields move in opposite directions.