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Notice also- Watt vote is before august earnings report! Coincidence? Does DC wanna put the nail in fnma before the next fnma fireworks show makes for more resistance to corker's bill?
Idiots can do a lot of damage when you give them tools they can't handle! That's DC in a nutshell.
I'm still under current pps with some of my shares, and over with others. Averaged a bit over, and I'm trying hard to keep my long attitude and approach. But wow, when you've got $ on the line with a political stock, the grandstanding pols and their huge dog and pony shows can really shake your confidence! They'll just do what their donors want, and how can I know what that is? For instance, I've read that BOA wants to be the backer of the new FMIC. Hence the selection of Watt, who is their main DC lapdog / agent. That would suggest a TBTF bank is pushing for dissolving fnma, so they can get all fnma's business, essentially. That would be bad for my long position.
Doesn't this put an end to fnma longs? Or would they be counting on getting their fair share of the liquidates assets once fnma is wound down?
Where did you see the info that shows Watt owns shares? I think we'd all love a link to that! Please share.
Well yes but if that's what really has been happening, then longs lose one of the reasons they had hope; that hedges were in this long with them.
Or have the hedgies been shorting since around $2? And this is the end of their play?
That statement doesn't necessarily mean that the GSEs themselves would be released from c-ship. They could wind them down and go with corker's plan, which is one way to privatize this.
Are we seeing a headfake here? Are they in DC only pretending they want to dissolve the GSEs, only to allow the hedgies and others to get more cheap shares? Then suddenly Reed's bill picks up steam and becomes favored and enacted?
That statement doesn't necessarily mean that the GSEs themselves would be released from c-ship. They could wind them down and go with corker's plan, which is one way to privatize this.
Are we seeing a headfake here? Are they in DC only pretending they want to dissolve the GSEs, only to allow the hedgies and others to get more cheap shares? Then suddenly Reed's bill picks up steam and becomes favored and enacted?
Sounds like if only demarco can hang on to his position until fnf have repaid the gvt what they borrowed, maybe he'd decide to release them. It'll only be another quarter or two. If only it were that simple.
Thanks obit. I don't think this admin would take any measurement of how palatable any particular reform of Fnf would be to the public into much consideration. They havn't quite done so with much else.
Forgive me if we all have heard the answer to this before, but can Demarco or whomever is head of fhfa unilaterally decide to release fnf and execute that release by himself? Or does treasury make that decision?
I think dems' part-wide desire is to get that principal reduction. President has wanted that for years. My take is: dems will fight to get that and to keep FnF in c-ship. Counter forces to that will be courts, gop, time, and political momentum.
Also big bank $ usually gets what it wants. What do the TBTF banks want here? There was some info out there suggesting they were behind Corker's bill to dissolve fnf, so they could take their place as the $ that backed the new single entity. How much will the real bill, whatever results, serve the TBTF banks is the question. Answer probably is: the TBTF banks will be WRITING the bill themselves. Reed's bill gives fnf longs hope but heck, maybe it's as bogus as Corker's was (just a PR stunt). Go courts! But then... They can be unpredictable too! Shanon1's recent post provides very interesting data and precedents.
I'm afraid I agree. I'm long FNMA but Watt's stance isn't good for pps, and anyone else the president nominates will just want to do the same thing. We may have to wait until the next administration in 2017 until we see full release from c-ship. Until then, maybe congress holds up Watt nomination just to negotiate a better bill on housing finance reform that is slightly more favorable to FnF (and pps)? Maybe courts decide FnF must be released. Maybe pps will rise enough to satisfy its shareholders who are long, as all the twists and turns develop over the next few years anyway.
I've seen articles saying Watt would likely keep FnF in c-ship for a long time. Demarco is more in favor of allowing FnF to eventually be let out of c-ship, correct?
If Watt is installed, is there any reason to think that would be good for FnF?
Corker's bill was a PR stunt that seeks to dissolve FnF. Given that legally that would be difficult to get away with, without compensating shareholders, maybe the GOP's true aim is to release FnF from c-ship and diminish gvt involvement without actually dissolving the companies.
Who's really better for FnF pps, Watt or Demarco?
If you were away from any electronic communication during all of next week, how would you set your sell orders for fnma?
Good chance that will be the case with me. Looking for advice! I'm long and on one account I'm averaged higher than today's pps. Big questions is: does anyone think a really big spike and subsequent full correction will happen during next week? I'm thinking that if we see another spike, it'll be in Aug at earnings time. Not next week. Other than Watts's confirmation hearings, there's no news expected next week right? No housing starts news or anything. Please chime in with any thoughts on this.
Jed- im taking a very similar approach lately (except for fnma, im long). Taking small gains (sometimes very tiny ones) and compounding them. Do the math and you'll get a sense of how long it'll take you to reach $25k. It won't be as long as you think, probably, if you consistently take small gains and try very hard to keep your losses even smaller! Be disciplined, not greedy. Sell when it's going up. Meanwhile, study more on how to spot tops and bottoms, so you'll be ready to ride the dips once you're able to day trade. I'm fairly new to this but off to a decent start because of that approach.
What's driving this? Any news?
Looks like Watt's a shill for Bank of America, which is based in his congressional district. Conjecture, anyone?
What network? What was the gist? Who was speaking? Please do share. Very interesting bc I don't trust this admin's appointees one tiny bit.
Fnma: the newest "defensive stock"
Interesting take on this. I'm long fnma and I agree with much of this. I just try to keep in mind, though, how common it's been recently for for our gvt to act in an unprecedented and unconstitutional way. And it doesn't even cause a blip on the radar screen of most people when it happens. If this goes to supreme court, for instance, should we trust them to protect private property? Check out the infamous Kelo decision and you'll see private property is no longer promised any protection. Then last summer they ruled that the gvt can force us to buy something we might not want to buy. And Look at how bond holders were treated w/ the GM thing. We need to face it: our gvt is completely out of control and therefore there is still some considerable risk in assuming that they will do the "right thing" on fnma and fmcc. We can hope for that and we might be rewarded big time. But we shouldn't assume. Hence the risk is still inherent. We should hope that if only for their own vanity, our leaders will do the right thing. But we should assume they will drag their feet, attempt to keep this cash cow for as long as possible, and will attempt to circumvent the 5th amendment at every turn. And we should hope that they eventually fail, because that's how it needs to be. If there wasn't the element of an aggressively unconstitutional gvt at play here, I'd be piling downright unhealthy and unreasonable amounts of $ into FnF! As it stands now, I'm in it significantly, maybe more than I should be, even. But I'm still trying to keep my head level with respect to the gvt angle. They can be unpredictable and sometimes they simply do what they want, regardless of our existing laws. Let's just hope that what they want ends up being in sync with what we want for FnF!
Q2 of 2014, right?
Thanks
Do you include any particular macro environment predictions as a driving part of your GSE specific DD? I assume you foresee the macro picture (rates, employment, dollar, taxes) being favorable for the GSE companies, at least. But could you share a brief thought or two on how you see the macro environment to be over the next 3-5 yrs? If favorable to gses, then probably also favorable to many other stocks in other sectors.
To be clear, you're basically expecting these gses to get back to the highest pps they've ever had within around 3 years. Don't get me wrong, I'm not doubting here. I'm just trying to put it into context
Whether or not one thinks profits will matter, Blue, does that $40 bil profit figure consist of the DTA mostly? Or to put my question differently, how much (an approx percentage maybe) of Fnma's profits over the next quarter or two should we expect to have come from fnma's core operations instead of from bank settlements and Dta?
In a free market, we wouldn't all be tuning in live to watch our dear leader make announcements like today. The market would adjust to circumstances in an ongoing way.
Exactly. I posted about macro stuff today but fnma will move on earnings in aug mostly, then on political decisions (if any) after that, then on macro data. Even in bad macro times (like, say early 90s recession), look at fnma's pps (in the $20 range in 1990s $). So, if the eventual political news is at all reasonable, resulting in some remaining value for commons, FNMA pps will eventually increase a lot. In the meantime, we'll hopefully see a pps boost as Aug earnings report arrives.
Same thought hit me. It's equally infuriating that some of our supreme court justices in the last few years have begun to cite foreign laws in their decisions! That's not what a sovereign nation's legal system of precedents is based on! But Ben saying that did not shock me, bc we have an entire administration that is obsessed with trying to be as much like Europe as possible. Our system should be as free and open and transparent and competitive as possible, not some reflection of some other foreign system that only keeps the little guys down. So let's have our own housing system, regardless of what the rest of the world is doing. You can find such a wide range of policies throughout the world that saying "other nations have systems that might be better for us" doesn't narrow anything down anyway. Do we want, say, North Korea's housing system? I hope what Ben said isn't just code for "looks like we'll be taking over the housing sector 100%". But you never know with this administration. They did it to student loans already. Why? Because they want the control. They want to be able to dole out goodies to people at the gvt's discretion so they become dependent on the gvt and that party in particular (well both parties have been doing that too much). I digress.... Let's make our own housing system.
I'm no fan of the bernanke but he did say that the Fed will only look to raise rates once the unemployment figure reaches about 7%. And raising rates might not happen until several quarters after that threshold is reached. As we know, the official unemployment number is a bunch if B.S., manipulated to make the gvt's policies look as good as possible. But still, it could take 6-12 months to reach that 7% threshold for all we know. That means more QE printing and more support for the housing sector until we reach 7%. If the gvt acknowledged the more accurate "U6" unemployment figure, which includes people who are part timers who WANT full time jobs, instead of the always happy-happy-joy-joy "U3" figure, which doesn't include underemployed people or people who haven't looked for a job in 4 weeks, then we'd probably never see Ben's 7% threshold hit. Even so, it doesn't seem that our official employment numbers per month won't be doing much more than barely keeping up with what's required to not increase unemployment (we require approx 125k new jobs / month just to keep up with new people entering the labor force) for a very long time. Who sees any business friendly policies from D.C. These days? Tax increases, etc, generally business-unfriendly policies abound out there. The only support had been the Fed's money-printing. So I would predict we won't see the Fed begin to taper as soon as some are fearing today. You heard Ben, there was talk in the FOMC meetings of continuing QE into 2015 or even 2016. Even if they taper at the end of this year, they'll still be pumping 10s of billions of $ into the markets every month. I think that if there are any solid fundamentals supporting the housing rally, it will be able to sustain that momentum through the first couple of rounds of tapering.
He was specifically saying that, in terms of who owns the majority of the MBS market, the Fed itself only holds a small percent of all the MBSs out there. Then he said Fannie and Freddie "are it", because they own he majority of MBSs.
But, as I posted, he also added that the Fed owns some Fannie and Freddie securities, and they "find it useful" to do so.
Ben: we find it useful to own fannie and freddie.
Looks like the 2pm release already has the DOW taking a hit even before helicopter Ben's comments.
Here's one from yesterday that explains what the author says are the three main possible results / fed decisions and a timeline for each regarding when they would most affect the market. You'll have to interpret a bit for yourself how you imagine housing sector might be affected. But generally, easy $ printing (QE) by the Fed tends to boost stocks and housing and other things (even though it also comes with some negative consequences). The big question is whether the Fed Reserve will announce that it will begin slowing down (tapering) its massive $85 billion per month bond-buying / money-printing program ("QE"), or whether it will announce no change and QE will continue as is.
http://www.zerohedge.com/news/2013-06-18/tomorrow-big-day
Lots of links. You'll probably find a relevant one if you search the terms:
Fed reserve, taper, qe, announcement, bond buying, housing sector, fannie freddie.
Normal dip expected this am? Chance to flip and add?
Is there any reason to think the hedge funds that own fnma are only into fnma for the short term / flipping? Or is it more likely they are looking to reach double digit pps on this eventually?
Where are you foreseeing your next exit to be? I got in on some 1.62s and some 1.50s too on Fri.
All this talk of the next run makes me wanna solicit the best top-spotting advice this board can muster! Ok, let's go over the basics of top-spotting as we more modest traders understand them: slowing volume, stalling pps, candle confirmation of reversal, maybe even some look for pullbacks to within the top BB. Anyone got a great way to spot tops that they'd like to share? What time frame candles you like to watch for this, etc...
Nice to hear it put so clearly obit. Thanks.
Anyone have thoughts on how the Fed's taper announcement might affect us fnma holders tomorrow? And for the August earnings? And over The next 6 months - 1 yr of fnma pps?
So, How badly should we expect any Fed taper announcement to affect our mid-term FNMA expectations? Or do you think it won't mean much to longs? How badly might it affect FNMA's performance when August earnings announcement happens?