The Fannie / Freddie Bailout: Necessary, But Don’t Expect a Happy Ending
July 14, 2008
Money Morning submits:
By Shah Gilani
It’s the end of the "American Dream." It’s the story of how the inevitable bailout of insolvent housing giants Fannie Mae (FNM) and Freddie Mac (FRE) - with the Federal Housing Administration soon to follow - will ultimately lead to such sorrowful sequels as "TheDeath of the Dollar," "The Downgrading of U.S. Government Debt" and, yes, "The Depression."
The Fannie / Freddie Bailout: Necessary, But Don’t Expect a Happy Ending
VIX Hits 3-Month High, Market Skeptical About Fed’s Power
July 14, 2008
Kathy Lien submits:
No US economic data was released Monday morning explaining the listless action in the US dollar. Traders are hesitant because they know that things could change dramatically with the 3 event risks Tuesday that could shake up in the US dollar.
The first is the retail sales report for the month of June. Despite a deteriorating labor market and rising food and energy prices, consumer spending should remain positive. Discounters like Wal-Mart (WMT), Costco (COST) and Target (TGT) all reported stronger sales in the month of June, indicating that even though consumers may be trading down, they are continuing to spend their tax rebates. As long as consumer spending does not collapse, there may still be some hope for the US economy. Both the ICSC and SpendingPulse reports also support stronger spending numbers. Excluding autos, SpendingPulse reported that sales rose by the largest amount in 7 months.
VIX Hits 3-Month High, Market Skeptical About Fed’s Power
14 Jul 2008 16:00:00 - Top 5 Stocks up on Unusual Volume
July 14, 2008
| Intraday Unusual Volume - Top 5 Up |
| Symbol | Volume % Change |
Price % Change |
News | |
| CRME | 1479% |  10.37% |
news | |
| CSGS | 326% | 12.76% |
news | |
| MMSI | 197% | 17.83% |
news | |
| PNFP | 165% | 21.15% |
news | |
| ZBRA | 159% | 31.81% |
news | |
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14 Jul 2008 16:00:00 - Top 5 Stocks up on Unusual Volume
Dollar on the Defensive Pending Bernanke Testimony, Retail Sales Data
July 14, 2008
Grace Cheng submits:
The US dollar had a good start when the forex market opened in Asia on Monday and into the European trading session, inspired by the US government’s plan reported Sunday evening to help the struggling mortgage giants Freddie Mac (FRE) and Fannie Mae (FNM). But as we move into the New York session, traders are taking their profits on dollar strength for fear that the US currency may not have sustained buying interest due to continued downside pressure on the US stock markets and focus on oil prices.
The US dollar will play defense this week, how could it not? The US subprime crisis is rearing its beastly head, and instead of talking about economic recovery, we are talking about an economic disaster that has to be averted or cushioned to some extent. George Soros is suggesting that there could be further weakness for the greenback.
Dollar on the Defensive Pending Bernanke Testimony, Retail Sales Data
Preferred Stocks Get Crushed
July 14, 2008
Hickey and Walters (Bespoke) submit:
Preferred stock owners, especially financial preferreds, have seen share values evaporate over the last couple of weeks. Below we highlight the S&P Preferred Stock index going back to late 2003, along with a chart of its 50-day moving average spread. These shares are thought to be less volatile and less risky than common stocks, but with the index currently trading nearly 20% below its 50-day moving average, they have been anything but that.
click to enlarge
Peterson’s One Billion Dollar Debt Crusade
July 14, 2008
Mark Thoma submits:
Wow, here’s what’s coming (from here):
From the NY Times:
Peterson’s One Billion Dollar Debt Crusade
Another Bad Start
July 14, 2008
Hickey and Walters (Bespoke) submit:
While we’re only nine days into the month, the second half of the year is starting off just like the first half, and unfortunately for the bulls, it’s a bad one. The chart below shows the S&P 500’s performance during the first 50 trading days of 2008 (red line) along with its performance so far during the first nine trading days of the second half.
As shown, the S&P 500 is down 3.54% so far this half compared to a decline of 3.55% during the first nine trading days of 2008. Let’s hope this pattern doesn’t continue.
Burst Housing Bubble Eliminating Two Decades of Wealth
July 14, 2008
Research Recap submits:
The crash of the housing bubble is likely to eliminate most, if not all, of the gains that US families made in accumulating wealth over the last two decades, according to new projections from the Center for Economic and Policy Research.
The median family in the cohorts from age 35-44 is actually projected to have less wealth in 2009 than their counterpart in this age group in 1989.
Burst Housing Bubble Eliminating Two Decades of Wealth
U.S. Dollar: 5 Event Risks Not To Miss
July 14, 2008
Kathy Lien submits:
Fannie Mae (FNM) and Freddie Mac’s (FRE) developments continue to drive the price action for the currency market. Despite Paulson’s announcement yesterday that he will be seeking Congressional Approval for the authorization to buy stock in Fannie and Freddie and a higher credit line, currency and stock traders are still not convinced that this is enough. On Friday, Fed Chairman Bernanke announced that Fannie and Freddie could tap into the discount window.
As the Wall Street Journal muses in this morning’s paper, “Are the Hunters Low on Magic Bullets?”
U.S. Dollar: 5 Event Risks Not To Miss
Barron’s: Wrong on Housing
July 14, 2008
Barry Ritholtz submits:
New Home Completions, 1968-2008
click for ginormous chart
Major New Home Building Housing expansions since 1968 are marked as a red horizontal line at bottom. They previously lasted 2-4 years (71-73; 76-79; 83-87) The most recent boom far exceeded all previous expansions, running form 1992 - 2003 — then exploding upwards for another 3 years til 2006. >
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