How do you think the LEH thing will play out?
The 10 bucks BSC fetched may be looking too rich for them.
And what about all the financial markets they have their dirty hands in, including commercial paper and preferred stock underwriting?
Are sacrosanct money markets the next headline? I'm almost hoping it is, as that would finally wake up the public as to the magnitude of the crisis.
What's your stategy before the next bomb actually drops?
The shareholders are toast if the gov't takes them over (recall the Savings and Loan debacle of the early 90's).
The bondholders? Keep in mind there are actual properties behind those loans, not just someones promise to pay, and Fannie and Freddie had higher requirements for purchasing mortgages than say Countrywide, which seemed to have no standards at all. What I find funny about all this is that gov't wants the GSE's to raise capital under the current circumstances so that they can buy even more loans.
As far as Dan Fuss goes, he is one shrewd cookie, and has done very well by his fund holders over the years. No, I don't own his fund.
Fannie still on Fidelity's new corporate note offerings page with AAA rating and coupon rate barely above 10 year treasury. Those bond raters are really on top of things. Quick, you've got til Monday to subscribe
Maybe that's why they still have full service brokers
C'mon. Plenty of potential buyers of LEH lock stock and barrel under $10 IMHO. And worst case we add another $1T on paper to the national debt if we nationalize those $5T in mortgages that Fannie and Freddie have out there, depending on accounting valuations. No direct cash required in the latter, though the dollar no doubt finds a new bottom when(if?) announced. Makes a $40-60B direct capital infusion via Treasury purchases from GSE ports seem cheap.
Fannie and Freddie debt trading near a full 100 basis points higher than Ginnie Mae debt, the latter being true government agency guaranteed debt. You can see the profit possibility if the other GSEs become government agencies again like they were pre-'68. On as little as 3 to 1 leverage, profit potential of near 100% if that gap gets closed.
see, this is one of those who do you belive deals. apparently Fuss is rated up there with Bill Gross, etc.
you don't suppose this guy is talking the stuff up, while he's trying to unload do you?
wonder if any of the deep value guys are buying?
If we accept the demise of FRE, FNM, and LEH as done deals, and assume there are 2 or 3 more waterbugs under the fridge that will soon emerge, how will the Federal government possibly have enough resources to reimberse shareholders and debtors?
For a money manager to through new money at these guys seems criminal. Who's cash is this guy holding?
from the NYT story on Freddie/Fanny--
".....This would mean the shares would be worth little or nothing, and the losses on home loans they own or guarantee -- half of all U.S. mortgages -- would be paid by taxpayers." blah, blah.......
in another story--
NEW YORK (Reuters) - Loomis Sayles, one of the largest fixed-income fund managers, is buying Fannie Mae and Freddie Mac agency debt, a top firm official said on Thursday.
Dan Fuss, vice chairman of Boston-based Loomis Sayles, which oversees more than $100 billion in fixed-income securities, said he believes the corporate debt of the two mortgage finance companies offer "outstanding value," and he is confident the U.S. government would not let them fail.<<<<
Dan Fuss has a decent reputation in the biz, probably not a dummy.
AHRpfC now at 14.70 which works out to a whopping 15.94% yield. I can't see them going belly-up, which is my only concern for the preferred, so am nibbling on the way down.
Maybe I'm nuts and we're really *are* going to see a total collapse of the financial system. But in that case the value of stocks will be the least of my worries (where's the ammo for the AK-47, do we have enough grain stockpiled for the kids to survive the winter,...)
BTW, the chart convinces me that I really must put in whatever effort's
needed to grasp their mortgage derivatives and the term structures
of their funding. This particular
technical configuration, on such a
scale, should never be blown off.
So thanks for bringing it up from
time to time.
If it turns up from around the 2007 low, that would be your head-and-shoulders bottom reversal. Very reliable.
You may be right in your 1970's analogy, but we are definitely due
for at least a tradable rally.
I do find it curious that a market
should record such deeply oversold
metrics, so soon after the markdown
began and, relatively speaking, so close to top prices.
The AHR chart is a good example.
One hardly expects to see the construction of such a base with
a neckline (red) so close to the
comparatively little top from which
the selling began.
Something's out of whack here, but I'm at all sure exactly what.