Let me warn you. If you don't like bad news then pass on reading this article.

The IMF Issued a comprehensive report on the financial state of world economies. The report, which was carefully researched, is full of gloomy findings that may shake you up a bit. Even with massive stimulus efforts worldwide, world economies still face major hurdles. Here are some highlights of the IMF report:

• Global financial institutions face a total of $4.1 trillion in loan losses and other assets.
• The IMF estimates that the US would write down $2.7 trillion in losses up from $2.1 trillion previously estimated.
• Including Japan and Europe write downs are expected to reach $4.1 trillion. Banks will bear 2/3 of these losses with the rest coming from hedge funds, insurance companies and pension funds.

Chinese solar concern ReneSola Ltd. (NYSE: SOL) is trading sharply higher today after the company reported that fourth-quarter revenue will exceed analysts' expectations. SOL expects to rake in revenue of $157 million to $159 million, compared to the Street's consensus estimate of $154 million.

However, the rest of ReneSola's forecast wasn't quite as sunny. The alternative energy firm warned that it will swing to a fourth-quarter net loss of $125 million to $130 million, prompted by "significant downward pressure" on average selling prices and margins. ReneSola predicted quarterly writedowns of $130 million to $140 million, due to the rapid deterioration in the price and value of materials.

The suckers who bought into bank stocks a month ago thinking the worst of the credit crisis and financial company write-offs have mostly passed have seen much of their investment hammered.

And that is about to get worse. The easy-to-see reason is that mortgage paper is still losing value as housing prices continue to drop.

More ominous is the borrowing that banks are making at the Fed. According to Reuters, "Banks borrowed a record amount of funds from the Federal Reserve in the latest week as the year-old credit crisis took a persistent toll." That number hit $17.45 billion per day. In other words, the bank balance sheet problem is extending into the third quarter and may be getting worse.

The IMF has commented that the total write-off due to the mortgage debacle will hit $1 trillion. Only about 40% of that has been written off, which means that the next two or three quarters of earnings could be devastating.

Citigroup (NYSE: C) now trades at $18.59, against a 52-week low of $14.01. It has a market cap of $102 billion. If it has to raise another $15 billion to offset losses, especially if the stock sold to raise the money is below market, Citi's shares could move down to $12 or $13. Other large money center banks face the same trouble.

Banks will hit new lows before the end of the year.

Douglas A. McIntyre is an editor at 247wallst.com.

If you were getting used to the bulls running the show, the bears whispers of "Remember us?" turned much louder today. If you were looking for the day we finally got profit taking after a monster rise in financial stocks, it came. Weak housing data was said to be one of the key issues for the market, but the more than 400,000 weekly jobless claims filed was much worse than expected. Oil didn't skyrocket but it did at least catch a bid today and oil was back up to over $125.00 per barrel late in the day. If you want a big figure, PIMCO's Bill Gross said that total financial writedowns could see $1 Trillion.

Here are today's unofficial closing bell levels:
DJIA 11354.49 (-277.89)
S&P500 1253.12 (-29.07)
NASDAQ 2280.11 (-45.77)
10YR T-NOTE 4.016% (-0.132%)
52-WEEK LOWS
TOP ANALYST UPGRADES
TOP ANALYST DOWNGRADES

Amazon.com, Inc. (NASDAQ: AMZN) saw a mega-surge after the market decided that its above estimate earnings and somewhat conservative guidance was to match the environment rather than to be any red flag. Shares were up a sharp in today's final minutes.

Hank Paulson led the charge this morning talking about the need and credibility of the GSE's. Oil was up for a while but after Tropical Storm Dolly headed further south than the oil and gas infrastructure that locked in heavy oil selling. The major focus continues to be earnings and financial stocks in particular. Below are today's unofficial closing bell levels:
DJIA 11601.60 (+134.26)
S&P500 1276.80 (+16.80)
NASDAQ 2303.96 (+24.43)
10YR T-Note 4.097 (+0.03%)
52-Week Lows
Top Analyst Calls

American Express Company (NYSE: AXP) was one of the more poor financial stocks today after the company choked on earnings last night. It is also facing deteriorating business despite it being thought of as the highest quality credit card around. Shares were down 9.2% at $37.13 in today's final minutes.

MAJOR PAPERS:

• According to Yahoo! Inc (NASDAQ: YHOO), the Wall Street Journal reported that a severance plan investor Carl Icahn said is "excessively expensive" would come into play if Icahn is successful in his plan to take control of the company's board; Yahoo! maintained that the plan is structured to prevent Yahoo! from altering or dismantling it while under a proxy challenge.
• The Financial Times reported that Lehman Brothers Holdings Inc (NYSE: LEH) almost reached a strategic deal with a group of Korean financial institutions as part of its recent capital raising initiative, and the investment bank may still sign an agreement with the Korean companies this year, inside sources said.
• According to the Financial Times, Merrill Lynch & Co Inc (NYSE: MER), UBS AG (NYSE: UBS) and Citigroup Incorporated (NYSE: C), which are most exposed to MBIA Inc (NYSE: MBI) and Ambac Financial Group Inc (NYSE: ABK), are facing further write downs of up to $10B after the bond insurers lost the battle to keep their triple A credit ratings in tact.
• A source familiar with the matter told dealReporter that Barnes & Noble Inc (NYSE: BKS) is conducting due diligence, but has not established whether it will competitively bid for Borders Group Inc (NYSE: BGP). Should Barnes & Noble indicate real interest, the biding process could be delayed, the source said.

OTHER PAPERS:

• The Detroit News reported that Ford Motor Company (NYSE: F), in an effort to keep up with changing consumer demand in the U.S., is assembling a plan that will shift entire truck plants to car production.

MAJOR PAPERS:

• UBS AG (NYSE: UBS) won't comment on write-down estimates, but according to the Wall Street Journal, investors are expecting it as prices for mortgage securities have significantly gotten worse over the past several weeks as evidenced by Lehman Brothers Holdings Inc (NYSE: LEH) profit warnings.
• Yesterday Lehman's stock fell 8.7% as the firm announced a projected $2.8B second quarter loss and a $6B capital raise. Options activity indicated a lessening volatility, the Wall Street Journal reported, a sign that perhaps the worst may be over.
• According to a person familiar with the matter, the Financial Times reported that China's Qingdao Haier has approached investment banks to advise it on a bid for General Electric Company's (NYSE: GE) appliance business.

OTHER PAPERS:

• A brief filed by plaintiffs in a shareholder lawsuit against Yahoo! Inc (NASDAQ: YHOO) and its directors claimed that an employee severance plan put in place to protect workers after a merger with Microsoft Corporation (NASDAQ: MSFT) should be repealed immediately. The New York Times reported that the plaintiffs believe the plan could skew the outcome of a proxy battle between Yahoo! and Carl Icahn for control of the company.

Bloomberg News reports that banks have kept $35 billion worth of asset write-downs from making the leap from their balance sheets to their income statements. Accounting rules permit this but it delays the inevitable -- in which a write-down on the balance sheet flows to the income statement. The reason banks are using this delaying tactic is that they can't raise enough capital to close the gap. But until they do, others will be wary of dealing with them.

Here are some examples:

• Citigroup Inc. (NYSE: C) subtracted $2 billion from equity for the declining value of home-loan bonds in its May 2 10Q without mentioning the deduction in the earnings statement or conference call with investors that followed; and.
• ING Groep NV placed 3.6 billion euros ($5.6 billion) of negative valuations in its capital account, while disclosing only an 80 million-euro depletion to income

MAJOR PAPERS:

• General Motors Corporation (NYSE: GM) plants that were idled during the American Axle & Manufacturing Holdings Inc (NYSE: AXL) strike are set to resume production mow that the strike has been settled, the Wall Street Journal reported.

OTHER PAPERS:

• The Telegraph reported that Halliburton Company (NYSE: HAL) is expected to determine this week whether it will make a GBP1.8B counter bid for its British competitor, Expro International Group (OTC: EXPRF).
• The Telegraph also reported that U.K.-based Imperial Tobacco Group Plc (NYSE: ITY) could conduct a GBP5B rights issue this week. The company has suggested that it needs the funds in order to retain its investment-grade credit rating following its acquisition of Altadis.

WEB SITES:

• According to Bloomberg, regulatory filings show that banks such as Citigroup Incorporated (NYSE: C) are failing to acknowledge at $35B of additional writedowns in their income statements.

MAJOR PAPERS:

• U.S. mall owner and operator General Growth Properties Inc (NYSE: GGP) is reportedly shopping its portfolio for capital to pay off $18.7B of debt coming due over the next four years to potential joint venture partners, according to the Wall Street Journal.
• The Wall Street Journal also reported that Merrill Lynch & Co Inc (NYSE: MER) is expected to reported another quarterly loss this week, as well as up to $8B in new write-downs, a person familiar with the matter said. This would bring its total to more than $30B since October.
• The Financial Times reported that General Electric Company (NYSE: GE) is planning to invest up to $2B in China in acquisitions and other deals in order to double its revenues in the country...

WEB SITES:

• Barron's Online said Gildan Activewear Inc (NYSE: GIL), the leading maker of undecorated t-shirts and sweatshirts for the U.S. wholesale market, might be worth a look. All of the company's shirts are now made in Gildan-owned factories in Central America and Caribbean, allowing Gildan to achieve cost benefits of offshore manufacturing before competitors like Hanesbrands Inc (NYSE: HBI). Gildan has recently broadened its market with the acquisitions of two sock makers.

MAJOR PAPERS:

• In a diversification move, Martha Stewart Living Omnimedia Inc (NYSE: MSO) will reportedly acquire the media and licensed properties of well-known TV chef Emeril Lagasse for $45M in cash and $5M in stock, according to the Wall Street Journal.
• According to the Wall Street Journal's "Heard on the Street," the current quarter for Lehman Brothers Holdings Inc (NYSE: LEH) will not be good and it also has a sizable amount of commercial real estate loans which could lead to bigger write-downs. The latest estimates are of an approximate $1.3B write-down, above recent estimates, and higher than the $830M in the fourth quarter.

OTHER PAPERS:

• The Australian Financial Review reported that General Electric Company (NYSE: GE) has emerged as a new contender for Allco Finance Group's transport leasing, property and power assets.

WEB SITES:

• Motorola Inc (NYSE: MOT) is suing Research in Motion Limited (NASDAQ: RIMM) claiming the company violated seven U.S. patents covering mobile-communications technology, Bloomberg reported. Research in Motion also filed a suit against Motorola claiming the company infringed on Research in Motion patents.

Ted Allrich is the founder of The Online Investor and author of Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he offers advice to investors who are just getting started.

Wall Street is the place where it's always darkest just before it gets pitch black. Pessimism (also known as fear) can grip investors firmly and paralyze them, particularly when it comes to buying stocks related in any way to mortgages. Many investors are afraid and fear the worst is still ahead. It may be. But it may not be.

The fear is certainly founded in experience. Any one owning stocks such as Countrywide Financial Corporation (NYSE: CFC), Citigroup Inc. (NYSE: C), Merrill Lynch & Co., Inc. (NYSE: MER) or Washington Mutual, Inc. (NYSE: WM) saw tremendous losses in 2007. These stocks lead the financial sector on the way down. And they should have. Their losses were catastrophic with writedowns of mortgages and derivatives in the billions of dollars. And no one really knows how bad the next surprise will be. So the natural and survival related reaction is to simply stay away from these stocks.

That would be a mistake. These are some of the largest companies in their fields. They are leaders. While they got greedy and paid the price, these firms have been around for a long time and have made profits for years. Countrywide had 25 years of profits before it took its first loss last quarter. It may take another loss for the fourth quarter of 2007. Management stated early in the quarter that it would show a profit. But investors are skeptical. The stock continues to hit new lows.

While it's prudent to be skeptical, it can be short sighted to simply ignore these sectors. No one knows how bad the fourth quarter was for these and other financial stocks. We'll find out in a few weeks when earnings are released. But what if the worst is behind these stocks? What if profits are back even if only by a small amount? If so, these stocks will soar. They're priced for the worst case: more losses with more to follow.

General Electric (NYSE: GE) and Merrill Lynch (NYSE: MER) announced a deal Monday, which will result in GE picking up most of Merrill's commercial finance business.

The deal is expected to be completed during the first quarter of 2008, and will add an estimated $10 billion plus in assets to GE Capital. Merrill has been hit pretty hard this year with the subprime mortgage mess, and this deal will result in around $1.3 billion worth of capital that the company will be able to allocate elsewhere.

Merrill, which announced a massive $8.4 billion worth of write downs back in October is in the middle of what it is calling a "strategic focus on divesting non-core assets." This sale is beneficial to Merrill because the firm's commercial-lending business has become reliant on companies that do not posses investment-grade credit ratings and pose a financial risk that Merrill does not need to be assuming, especially after Merrill's recent write down.

Shares of luxury home builder Toll Brothers Inc. (NYSE: TOL) are trading up 1.72% in the premarket following this morning's fourth fiscal quarter earnings release.

The company posted a fourth quarter loss of $81.8 million, or 52 cents per share, hurt by the slumping housing market and credit crisis. Included in the company's figures were $314.9 million pretax writedowns related to sold homes that came with no profit. Excluding that, the company's fourth-quarter earnings were 72 cents per share. Analysts had been expecting to see the home builder lose 77 cents per share.

The company also posted a 35% decline in its quarterly sales, which slipped down to $1.17 billion, slightly ahead of analysts' expectations for sales of $1.166 billion.

According to a statement from Robert Toll, chairman and chief executive officer, the year of 2007 was "the most challenging of the forty years" as Toll Brothers posted its first quarterly loss in 21 years. Looking ahead, despite its disappointing earnings, the company anticipates to sell in fiscal 2008 homes in a range of 3,900 and 5,100 at around $630,000 to $650,000 per home.

Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.

Countrywide (NYSE: CFC) indicated in an SEC filing that any downgrade in its portfolio by major credit agencies could make it hard for the company to tap the credit markets for more cash. According to The Wall Street Journal, Countrywide is trying to save its hide by "lining up additional sources of funds to try to maintain its investment-grade rating. Among other things, Countrywide is relying more on loans from the Federal Home Loan Bank of Atlanta. In addition, the company is heavily promoting above-average interest rates on certificates of deposit to attract funds."

Of course, Countrywide's plans to keep its investment rating may not work. If the value of its mortgage loan portfolio continues to drop, the firm could take much larger write-downs in the fourth quarter and into 2008.

If Countrywide cannot borrow money at reasonable rates, its stock, which trades below $14, down from a 52-week high of over $45, could go much, much lower.

Douglas A. McIntyre is an editor at 247wallst.com.