Market & Fannie Observations 07/27/07
Yesterday: "the $ was crushed vs YEN as the carry trade unwind continues."
said Yen carry trade along with loose central bank monetary policies are directly responsibile for global hyperliquidity and asset overinflation.
said Yen carry trade also supported LBO leveraged buy outs which have propped up the stock markets artificially.
The Nattering One has said it before and will say it again: "This stock market, debt market and the economy is a dead man walking on artificial life support."
Yesterday DJIA down 449 pts intraday, the Yen rallying to a 3 month high vs $. Last night Asian markets hammered as the unwind continued:
All Ordinaries Sydney -2.76%; Straits Times Singapore -2.43%; Hang Seng -2.76%; Nikkei -2.36%.
Today, $7.25B in Fed Open Market Reanimation. Tue -Thur, DJIA worst 3 day loss since August 2002, first time since Aug. 5, 2002 that the Dow lost more than 200 points in a day twice in three days.
Outdone today with a 160 pt collapse into the close for three 200+ point declines in 4 days, with conviction.
VIX over 21, a multi year high and Thur NYSE volume 2.78 B; NAZ 3.45 B; NYSE daily volume average 1.6 B; NAZ 2 B.
Yesterday: "Should the SP500 fall further and close for 2 days below 100 DMA there could be more downside." Is this a buying opportunity?
Perhaps, but not yet. FYI RUT 07/13 YTD +8.7%; today, all gone and in the red YTD.
DJIA & NAZ sitting on 75 DMA, NDX on 25 DMA, SP500 deteriorated 2 days below 100 DMA (1485), sitting below 150 DMA 1465, close 1461.
From Flecks latest "300 point drop? Just the start"...
there is a massive margin call in structured credit and there are no marginal buyers for it.
(1) There's going to be a tremendous opportunity to short absurdly priced tech companies (which are largely run by managements that seem more focused on playing beat the number
and fiddling option programs than on conducting their businesses); and (2) When the stocks of those companies start sinking, I think it will be a sign that the market is ready to accelerate to the downside.
And just when you thought it couldn't get any better... it does, and in spades...
We've often nattered about our Fannie & Freddie's exposure to MBS and derivatives before...
Today, those chickens start to come home to roost... from the Washington Post:
"Price deterioration in subprime mortgages has resulted in approximately $4.7 billion of unrealized losses for mortgage finance giants Fannie Mae and Freddie Mac, according to report published by Citigroup.
That is about 6 percent of the equity capital of the two GSE's government-sponsored enterprises."
The Nattering One muses... only 6% you say? Whats the real downside exposure? $182 Billion and more.
"The two companies' retained portfolios containing $182 billion of subprime bonds, almost all of which are rated triple-A.
Fannie Mae FNMA said its non-agency securities totaled $122.8 billion at the end of the second quarter, which included $47.2 billion backed by subprime loans.
Fannie Mae and Freddie Mac FHLMC have exposure to over $3 trillion in mortgages due to their guarantee portfolios and $1.4 trillion in their retained portfolios."
More musing and nattering... who did the rating on the $182 Billion in sub prime bonds? Will it get "rerated"? But wait thats not all...
If they were marked to market, what would they be worth? And imagine what will happen when the infected subprime RMBS that these GSE's sold into the market gets wiped out?
And if you act now, thats not all you get...
What happens when the delinquencies hit Alt-A and Prime and spread to all the FRAUDULENT loans that Fannie & Freddie have packaged into their "prime" RMBS?
Folks, sit down, strap in, sedate yourself and start screaming as this roller coaster takes the big dip...
cuz we are all about to go on Mr. Toad's Wild Wall Street, Derivatives, GSE, Housing, Mortgage, Financial and Banking System Disaster Ride!
Often wrong, but never in doubt, this is the Nattering Naybob and your not!
said Yen carry trade along with loose central bank monetary policies are directly responsibile for global hyperliquidity and asset overinflation.
said Yen carry trade also supported LBO leveraged buy outs which have propped up the stock markets artificially.
The Nattering One has said it before and will say it again: "This stock market, debt market and the economy is a dead man walking on artificial life support."
Yesterday DJIA down 449 pts intraday, the Yen rallying to a 3 month high vs $. Last night Asian markets hammered as the unwind continued:
All Ordinaries Sydney -2.76%; Straits Times Singapore -2.43%; Hang Seng -2.76%; Nikkei -2.36%.
Today, $7.25B in Fed Open Market Reanimation. Tue -Thur, DJIA worst 3 day loss since August 2002, first time since Aug. 5, 2002 that the Dow lost more than 200 points in a day twice in three days.
Outdone today with a 160 pt collapse into the close for three 200+ point declines in 4 days, with conviction.
VIX over 21, a multi year high and Thur NYSE volume 2.78 B; NAZ 3.45 B; NYSE daily volume average 1.6 B; NAZ 2 B.
Yesterday: "Should the SP500 fall further and close for 2 days below 100 DMA there could be more downside." Is this a buying opportunity?
Perhaps, but not yet. FYI RUT 07/13 YTD +8.7%; today, all gone and in the red YTD.
DJIA & NAZ sitting on 75 DMA, NDX on 25 DMA, SP500 deteriorated 2 days below 100 DMA (1485), sitting below 150 DMA 1465, close 1461.
From Flecks latest "300 point drop? Just the start"...
there is a massive margin call in structured credit and there are no marginal buyers for it.
(1) There's going to be a tremendous opportunity to short absurdly priced tech companies (which are largely run by managements that seem more focused on playing beat the number
and fiddling option programs than on conducting their businesses); and (2) When the stocks of those companies start sinking, I think it will be a sign that the market is ready to accelerate to the downside.
And just when you thought it couldn't get any better... it does, and in spades...
We've often nattered about our Fannie & Freddie's exposure to MBS and derivatives before...
Today, those chickens start to come home to roost... from the Washington Post:
"Price deterioration in subprime mortgages has resulted in approximately $4.7 billion of unrealized losses for mortgage finance giants Fannie Mae and Freddie Mac, according to report published by Citigroup.
That is about 6 percent of the equity capital of the two GSE's government-sponsored enterprises."
The Nattering One muses... only 6% you say? Whats the real downside exposure? $182 Billion and more.
"The two companies' retained portfolios containing $182 billion of subprime bonds, almost all of which are rated triple-A.
Fannie Mae FNMA said its non-agency securities totaled $122.8 billion at the end of the second quarter, which included $47.2 billion backed by subprime loans.
Fannie Mae and Freddie Mac FHLMC have exposure to over $3 trillion in mortgages due to their guarantee portfolios and $1.4 trillion in their retained portfolios."
More musing and nattering... who did the rating on the $182 Billion in sub prime bonds? Will it get "rerated"? But wait thats not all...
If they were marked to market, what would they be worth? And imagine what will happen when the infected subprime RMBS that these GSE's sold into the market gets wiped out?
And if you act now, thats not all you get...
What happens when the delinquencies hit Alt-A and Prime and spread to all the FRAUDULENT loans that Fannie & Freddie have packaged into their "prime" RMBS?
Folks, sit down, strap in, sedate yourself and start screaming as this roller coaster takes the big dip...
cuz we are all about to go on Mr. Toad's Wild Wall Street, Derivatives, GSE, Housing, Mortgage, Financial and Banking System Disaster Ride!
Often wrong, but never in doubt, this is the Nattering Naybob and your not!
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