Daily Updates

It is Official - Fannie & Freddie are in Conservatorship - Common and Preferred Shares will suffer losses

September 7, 2008 @ 11:46 am

I present to you the full text of both Hank Paulson And Mr. Lockhart. First Is Hank Paulson: Washington, DC– Good morning. I’m joined here by Jim Lockhart, Director of the new independent regulator, the Federal Housing Finance Agency, FHFA. In July, Congress granted the Treasury, the Federal Reserve and FHFA new authorities with respect to the GSEs, Fannie Mae and Freddie Mac. Since that time, we have closely monitored financial market and business conditions and have analyzed in great detail the current financial condition of the GSEs – including the ability of the GSEs to weather a variety of market conditions going forward. As a result of this work, we have determined that it is necessary to take action. Since this difficult period for the GSEs began, I have clearly stated three critical objectives: providing stability to financial markets, supporting the availability of mortgage finance, and protecting taxpayers – both by minimizing the near term costs to the taxpayer... [Read more...]

Fannie Mae & Freddie Mac - Sunday Update

September 7, 2008 @ 10:44 am

We have learned that there will be an announcement of some kind at 11:00am (US EST). Supposedly it will be Hank Paulson and the Federal Housing Finance Agency Director James Lockhart who will make the announcement. Speculation of what the plan will be has been running wild to say the least. And the resulting impact to the bond markets, currency markets, and the equities markets remain in just as much ‘cloud of uncertainty” as well. The NY Times broke a story that Fannie and Freddie have been over stating their capital reserves. In other words they have been lying all along as to how well capitalized they really were. And you know we have been telling you for many months that there was no way that their capital reserves could be healthy. Here is part of the NY Times article: The government’s planned takeover of Fannie Mae and Freddie Mac, expected to be announced on Sunday, came together after advisers poring over the companies’ books for the Treasury Department concluded... [Read more...]

Fannie Mae & Freddie Mac Will be put into Conservatorship - so says WSJ

September 5, 2008 @ 11:55 pm

The Wall Street Journal broke a story after the market closed today that the US Treasury Department was “close” to a plan to provide aid to Fannie Mae and Freddie Mac. (Link to Article) The Wall Street Journal said that an announcement may come as early as this weekend. My guess is that if there is going to be any announcement it will be on Sunday before the Asian markets open. So far, Fannie and Freddie are declining to comment and so is the US Treasury Department. There are more questions than answers right now. I can assure you that Lisa and I will be monitoring this situation very closely and will report on it as soon as we obtain any additional information. Because this news came out after the futures market had closed up for the weekend we can’t gauge the initial reaction of this news. However, the common shares of Freddie and Fannie did tumble after hours as it is thought that whatever the plan is it will wipe out the common shares. Also, there was a reaction in... [Read more...]

Bank Failure - Silver State Bank of Henderson, NV

September 5, 2008 @ 9:45 pm

Nevada State Bank Acquires the Insured Deposits of Silver State Bank, Henderson, Nevada FOR IMMEDIATE RELEASE September 5, 2008 Media Contact: David Barr Office – 202-898-6992 Cell – 202-622-4790 dbarr@fdic.gov En Español Silver State Bank, Henderson, Nevada, was closed today by the Nevada Financial Institutions Division, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. To protect the depositors, the FDIC entered into a Purchase and Assumption Agreement with Nevada State Bank, Las Vegas, Nevada, to assume the Insured Deposits of Silver State Bank. The branches of Silver State Bank will open on Monday as Nevada State Bank in Nevada and National Bank of Arizona in Arizona. Depositors of the failed bank will automatically become depositors of Nevada State Bank or National Bank of Arizona. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Over the... [Read more...]

Market Update - Indices Struggle with Opening Gap Resistance Levels

September 5, 2008 @ 2:48 pm

The major indices have been struggling with the opening gap resistance levels. Lehman (LEH) rumors are circulating once again of someone may buy them and that gave the market a bit of a boost. But at the moment the broad market is still struggling to make any headway, and when it does it quickly falls back again. The rest of the trading day remains ‘confused’ at best. Reminder that it is Friday so I will be watching my inbox for announcements from the FDIC about any new bank failures tonight. Shelia Bair of the FDIC kind of tipper her hand earlier in the week when she spoke that the FDIC has enough money (for now) to deal with the upcoming bank failures.  Read More →

Prime Mortgage Delinquencies on the Rise

September 5, 2008 @ 10:17 am

That’s right, I said ‘Prime’ mortgages. Sub prime implosion has continued to spread. The cancer that is the credit implosion has metastized and spread. US Q2 MORTGAGE DELINQUENCIES:  6.41% V 6.35% PRIOR - Highest level on record (29 years is the total data collection period) - Prime mortgage delinquency rate 3.93% v 3.71% prior -  Mortgages in foreclosure at record 2.75% v 2.47% q/q 1.40% y/y  Read More →

Futures Drop on Unemployment Data

September 5, 2008 @ 9:09 am

Our predictions of rising unemployment have been on target since the end of 2007. Our earlier prediction for 6.4% unemployment rate by the end of this year remains on track to being met. Additionally, the rate of rise is increasing which may require us to revise our estimates for unemployment upwards for 2009. We will be watching the reaction in the markets for an eventual retest of the July lows on the S&P 500 index. Will those lows be retested today? Or will the market float downwards over the next few days and weeks? Can’t say at this moment, but one thing we have remained very clear about for over a year now is that the markets will continue to go lower over time. We remain solidly within a bear market and shall be for a considerable time to come in our estimation. Bear market rallies will come and go, but the S&P 500 target price of 1040 to 1100 remains very real. Can the markets go even lower than that? Yes, and the possibility of that is becoming more and more a potential... [Read more...]

AUGUST UNEMPLOYMENT RISES TO 6.1%

September 5, 2008 @ 8:33 am

AUGUST CHANGE IN NONFARM PAYROLLS: -84K  V -75KE; CHANGE IN MANUFACTURING PAYROLLS: -61K V -35K - Prior June Non-farm Payrolls revised Higher from - 51K to  -60K - Prior Manufacturing Payrolls revised Lower from -35K to  -38K  Read More →