TN hick

A Closer Look at the Treasury's GSE Preferred Stock Purchase Plan

The Federal Reserve and other federal banking regulators said in a joint statement Sunday that "a limited number of smaller institutions" have significant holdings of common or preferred stock shares in Fannie and Freddie, and that regulators were "prepared to work with these institutions to develop capital-restoration plans." (translation - there is about $36 BILLION on banks balance sheet of PREFERRED shares - since the banks are in so much trouble we cannot let that fall or it will cause even more pain in our financial system = more of your tax dollars to make sure banks making private party investments are made whole. Repeat, your tax dollars will be used to make sure banks investments in Fannie and Freddie preferred is whole - enjoy)

A Closer Look at the Treasury's GSE Preferred Stock Purchase Plan

wow! the DOW futures have jumped from 27 to 232;
should make for a good inverse/put entry

A Closer Look at the Treasury's GSE Preferred Stock Purchase Plan

my four puts for this are KEY, MFA, NCT, SOV

E NUFF SED - why will this signal the end of the bear market?

As I read some of the announcements, the growth in mortgage finance holdings will be limited to a $200 Billion increase before the inventory must decline by 10% per year.

I think a large part of the increase limit will be soaked up by existing mortgage debt moving from the private sector banks to the GSEs, the actual purchase of newly initiated mortgages to clear the housing glut will be only a small part. Consequently, no healthy pickup of economic activity in the housing sector.

Second, as stated above, common and preferred equity holders will see the market value of their holdings drop 20-40%. Since a sizable portion of the preferred is held by the likes of KEY, MFA, NCT, and SOV [the four I identified as have the highest percent of their holding in the GSEs], these banks will also take a hit [dangerously close to fatal for SOV]. So, this will be no help for the financial sector.

Now tell me again, why this will signal the end of the bear market? What is going to be helped?

Yes, the market may react tomorrow with a giant up-move, but at some point in the near future, the bear is going to re-assert itself.

As for the preferential treatment being given the foreign banks; what good is their "safe" dollar-denominated debt instrument in a falling dollar market?

In my mind, the real danger is a dollar-caused crash of the Chinese market/economy.

JMHO

Residential Housing Finance: The Unwind Has Begun

being one that bailed out of NLY on the word of TMAs problems, I semi-dodged the barrage of bullets that TMAs problems invoked; I like your idea on the re-entry