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STI to cross 3000 boosted by long-term investors
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elfinchilde
Elite |
13-Jul-2008 20:13
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a little reading for the forumers here, before next week starts. Pay attention to the single line i've bolded if the rest is too much info. especially, the snapshot that accompanied this article: they say a picture paints a thousand words. lookit ol' Bernie. 
IndyMac has been ran upon. Our own economy shrank 6.6% in 2Q2008. draw your own conclusions. ----------------------- July 11, 2008 U.S. Weighs Takeover of Two Mortgage Giants By STEPHEN LABATON and STEVEN R. WEISMAN WASHINGTON — Alarmed by the growing financial stress at the nation’s two largest mortgage finance companies, senior Bush administration officials are considering a plan to have the government take over one or both of the companies and place them in a conservatorship if their problems worsen, people briefed about the plan said on Thursday. The companies, Fannie Mae and Freddie Mac, have been hit hard by the mortgage foreclosure crisis. Their shares are plummeting and their borrowing costs are rising as investors worry that the companies will suffer losses far larger than the $11 billion they have already lost in recent months. Now, as housing prices decline further and foreclosures grow, the markets are worried that Fannie and Freddie themselves may default on their debt. Under a conservatorship, the shares of Fannie and Freddie would be worth little or nothing, and any losses on mortgages they own or guarantee — which could be staggering — would be paid by taxpayers. The government officials said that the administration had also considered calling for legislation that would offer an explicit government guarantee on the $5 trillion of debt owned or guaranteed by the companies. But that is a far less attractive option, they said, because it would effectively double the size of the public debt. The officials also said that such a step would be ineffective because the markets already widely accept that the government stands behind the companies. The officials involved in the discussions stressed that no action by the administration was imminent, and that Fannie and Freddie are not considered to be in a crisis situation. But in recent days, enough concern has built among senior government officials over the health of the giant mortgage finance companies for them to hold a series of meetings and conference calls to discuss contingency plans. A conservatorship or other rescue operation would be the second time in four months that the Bush administration has stepped in to engineer a rescue to prevent the financial system from collapsing. Last March, it forced the sale of Bear Stearns to JPMorgan Chase to avert a bankruptcy of that venerable investment house. Officials have also been concerned that the difficulties of the two companies, if not fixed, could damage economies worldwide. The securities of Fannie and Freddie are held by numerous overseas financial institutions, central banks and investors. Under a 1992 law, Fannie or Freddie could be put into conservatorship if their top regulator found that either one is “critically undercapitalized.” A conservator would have sweeping powers to overhaul them, but would not have the authority to close them. The markets showed fresh signs on Thursday of being nervous about the future of the companies. Their stock prices continued a weeklong slide, hitting their lowest level in 17 years. The debt markets, meanwhile, pushed up the two companies’ cost of borrowing — their lifeblood for buying mortgages. The companies are by far the biggest providers of financing for domestic home loans. If they are unable to borrow, they will not be able to buy mortgages from commercial lenders. In turn, that would make it more expensive and difficult, if not impossible, for home buyers to obtain credit, freezing the United States housing market. Even healthy banks are reluctant to tie up scarce capital by offering mortgages to low-risk home buyers without Fannie and Freddie taking the loans off their books. Together the two companies touch more than half of the nation’s $12 trillion in mortgages by either owning them or backing them. They hold more than $1.5 trillion of the mortgages as securities. Others are sold to investors in the form of mortgage-backed bonds. In recent weeks, the companies have spiraled downward, undermined by declining confidence in their future and shaken by sharp declines in their assets as the housing markets have continued to slide and foreclosures have risen. In the last week alone, Freddie has lost 45 percent of its value, and Fannie is off 30 percent. Expectations of default at the companies have also risen; it costs three times as much today to buy insurance on a two-year Fannie bond as it did three years ago. Analysts expect the companies to announce a new round of write-downs and possibly be forced to raise capital by issuing additional shares, which would dilute their value for current shareholders. Despite repeated assurances from regulators about the financial soundness of the two institutions, financial markets have concluded that by some measures they are deeply troubled. Freddie, for instance, is technically insolvent under fair value accounting rules, in which the company puts a market value on assets as if it had to sell them now. Although Treasury Secretary Henry M. Paulson Jr. and Ben S. Bernanke, the chairman of the Federal Reserve, passed up invitations by lawmakers on Thursday to seek legislation to deal with the crisis, officials said that the administration had been privately considering a government takeover should the markets continue to turn against the companies. At a hearing of the House Financial Services Committee on Thursday, both Mr. Paulson and Mr. Bernanke were guarded, carefully trying not to say anything that could further erode confidence in Fannie and Freddie. They both said that the regulator of Fannie and Freddie had found that they were, in the words of Mr. Paulson, “adequately capitalized,” meaning that they had sufficient cash and other assets to withstand the turbulence in the markets. “Fannie Mae and Freddie Mac are also working through this challenging period,” Mr. Paulson said. Neither official would address a question posed by Representative Dennis Moore, Democrat of Kansas, who asked whether the failure of either institution would pose a risk to the financial system. “In today’s world I don’t think it is helpful to speculate about any financial institution and systemic risk,” Mr. Paulson said. “I’m dealing with the here and now, and the important role that they’re playing and other financial institutions are playing.” Mr. Bernanke said that Fannie and Freddie “are well-capitalized in the regulatory sense” but added that they, and other major financial institutions, needed to raise their capital levels further. Despite repeated denials by officials in the Bush and prior administrations, financial markets have long assumed the government would stand behind Fannie Mae and Freddie Mac in times of difficulty, both because they are integral to the housing and financial markets and because the companies have a line of credit to the Treasury. But Congress set that credit more than 38 years ago, long before the companies rose to such size and prominence, and its limit, $2.25 billion for each, has become a tiny fraction of the companies’ overall debt. Some analysts have begun to propose that the Fed also permit the two companies to borrow from it, as Wall Street investment banks began doing after the rescue of Bear Stearns. But there is no indication that the Fed is contemplating such a move. On Thursday, the rapid sell-off of shares of Fannie Mae and Freddie Mac came after a former central banker made comments that the companies might not be solvent, and an analyst at UBS issued a report critical of Freddie Mac. The turmoil also shook the debt of the companies, with one main measure indicating that their cost of borrowing has risen to the highest level since mid-March, when the government rescued Bear Stearns. Throughout the day, senior officials sought to reassure the markets about the financial health of Fannie and Freddie. Later in the afternoon, James B. Lockhart, the regulator who oversees the two companies, issued a statement that his agency was carefully watching the companies’ “credit and capital positions” and said that they were adequate to get through the current turmoil. Fannie Mae issued a statement saying that it remained financially strong. “Our company has raised more than $14 billion in capital since November 2007, including $7.4 billion most recently in May,” the company said. “As our regulator has stated, and has reiterated in public statements this week, we are adequately capitalized.” Sharon McHale, vice president for public relations at Freddie Mac, said: “Our regulator has emphasized that we have continued to maintain the highest capital rating, and we are in the market every day. We’ll continue to do so.” Shares of Freddie Mac plunged more than 30 percent and Fannie Mae’s more than 20 percent in the first hour of trading on Thursday. By the close of trading, Fannie shares had fallen nearly 14 percent, and Freddie shares had dropped 22 percent. It was the second straight day of declines for the companies. While their stocks trade on the New York Stock Exchange, Congress created the two companies to promote housing, and the marketplace has long come to believe that they would be bailed out should they become insolvent. They hold a far lower level of capital than banks do. In recent years, they have both suffered from accounting scandals and management shake-ups. Neither Mr. Paulson nor Mr. Bernanke, at the hearing on Thursday, would answer a question about whether Congress needs to give the regulators more tools to deal with the possible insolvency at either company. “I don’t think we should be speculating or talking about what-if’s with any particular institutions, and so with Fannie or Freddie, what I’m emphasizing is that the tool that I want is the reform and the reform legislation that would inject confidence into the marketplace,” Mr. Paulson said, referring to a measure that would revamp the oversight of the companies. The problems of the two companies spilled onto the campaign trail on Thursday when Senator John McCain, the presumptive Republican nominee for president, said he supported federal intervention to save Fannie or Freddie from collapsing. “Those institutions, Fannie and Freddie, have been responsible for millions of Americans to be able to own their own homes, and they will not fail, we will not allow them to fail,” Mr. McCain said during a stop at the Senate Coney Island Restaurant in Livonia, Mich. “They are vital to Americans’ ability to own their own homes. And we will do what’s necessary to make sure that they continue that function.” Jason Furman, the economic policy director for the Democratic presidential campaign of Senator Barack Obama of Illinois, said that Mr. Obama “believes the Bush administration’s willful neglect of warning signs in housing, in financial markets and in the job market, have compromised the nation’s housing finance system.” “The challenges facing Fannie and Freddie are part of the broader weakness in our economy,” Mr. Furman said. Senator Charles E. Schumer, Democrat of New York and chairman of the Joint Economic Committee, said that the markets should rest assured that the mortgage giants have a “federal lifeline” and would not be allowed to fail — though he said he thought a government rescue would not be needed and should be a last resort. |
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iPunter
Supreme |
13-Jul-2008 19:03
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4D is one of the hot topics...
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stupidfool
Senior |
13-Jul-2008 11:26
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Wat do snr citizen talk about in kopi tiam?
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iPunter
Supreme |
13-Jul-2008 09:12
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Elderly men should not go diving, etc...
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Livermore
Master |
13-Jul-2008 09:04
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What is karaoke? Go try sky diving man | ||
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iPunter
Supreme |
13-Jul-2008 08:45
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Karaoke is also good ... hehehe... |
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Livermore
Master |
13-Jul-2008 08:45
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Your posts are quite funny sometimes. You are really one funny guy!
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AK_Francis
Supreme |
13-Jul-2008 02:28
Yells: "Happy go lucky, cheers." |
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agreed, don't bother about the bad, the good and the ugly, life is very short. AK made plenty mistakes over my life span so far. though it is very difficult to forgive oneself for the mistake made and make correction, but life still needs to go on. so forget the pass and look forward loh. ha ha AK now is snr citizen leow, brain degrated greatly lately. can't do much studies, can only do some social works such as meet the people or friends sessions in kopi tiam when there is no activity in trading, be it in weekdays or weekends. it is great that AK got ample good advices fr the sifus in SJ. My heartfelt appreciation for that conveniences. |
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iPunter
Supreme |
12-Jul-2008 16:36
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Unless one is already s seasoned great trader, weekends are ideal for catching up one's education and research.
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elfinchilde
Elite |
12-Jul-2008 14:57
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hehe. and you've got a good post rating from me, CWQuah. yea, fully agreed. livermore, it's not so much the ticks and crosses i'm personally against, it's the mindset behind giving it. And yups too. dang dow didn't break its support. which means it's still rangebound. til then, the elf is still in  mode.
on other news: watch out for release of Lehman Brothers' results. that's the other coy that's rumored to be insolvent/bankrupt soon. this will be your other mover and shaker apart from freddie and fannie. weekend! shut off the screens! 
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Livermore
Master |
12-Jul-2008 11:15
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Livermore
Master |
12-Jul-2008 09:35
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Recently G8 leaders start to discuss about climate chnage, oil and food price etc. Frankly this is a reactive action and NOT a predictive action. | ||
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Livermore
Master |
12-Jul-2008 09:24
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Don't really need to get worked up over all these ticks and crosses. Frankly I don't bother too much about ticks and crosses. How you feel is within your own control. Keep cool. | ||
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CWQuah
Master |
12-Jul-2008 03:02
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Maybe it's time to make really clear some points on those ticks n crosses. Giving crosses to bearish opinions do NOT: 1. make Dow chiong 400 points overnight; or STI rally 50 points before 12.30pm on a given trading day; 2. increase the value of your stock holdings by 20% within the next 5 minute candlestick of the stocks. 3. enhance your trade limit by 10 folds immediately; Giving ticks to educated/logical/rational statements, do: 1. encourage future sharing of useful information; 2. help newbies in the world of stock trading to gauge the inherent value of a post as seen by other forumers; 3. make this free forum even a nicer place for meaningful discussions on stocks.
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CWQuah
Master |
12-Jul-2008 02:33
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The 11000 itch is here indeed. But I don't expect light till 17/18 Jul 08. Will not be doing any overnight positions, till I see certain technical signs. Meanwhile, prepare for STI 2862 to be broken big time. I suspect pretty serious dumping seeing how Asia closed on Fri. Still see too much greed in the markets to call it a bottom. Not too sure if STI will test 2745 again. I suspect Dow needs to drop to around 10780 before really doing a more forceful rebound rally. Remain NIMBLE.
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redash
Member |
11-Jul-2008 23:25
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TY Elf! Leant alot! Can never find from textbooks :oP Btw I thought the US subprime is already know... how will it impact SG market? I only thinking of UK side subprime nia... and then my trading group keep saying SG property market may raise abit in these few weeks... Waaaa bblur sia #_# Also, US price and Oil also has a inverse relation correct like gold and counter movement correct?? This one also makes me wonder, but after backtesting the paper gold share, there are occasions that both move up together and turn into short-term bull... hope this is also one of them, hahaha XoP Done a massive run on my 4 pcs scan, only these few counters raise and broke resistance justify their volume for past 14 days... Li Heng, Riverstone, Dayen, ChinaNTown, Sino Construction, UOB, Z-OBEE ... Anyone can do TA on these counters and provide some TA comments? In which case, what is it but a life of blind obedience? How many of us truly live, rather than just exist? How many of us have our own minds, and are capable of independent thought? Or do we merely follow the rules of society, and cast down and criticise those who are independent sparks? It's the singaporean way to just be armchair critics. But what's life without enthusiasm and fire; that's simply "ahhh, like that lor. can't do anything." "He's so stupid to stand out. Why bother." LOL I like that! Very close to the way I see 80% of people in the way... they merely exist (in their own confined circle/world)... never even live... Thks again Elf! Learnt stuff that may took me years or costly lessons =D |
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rogue_trader
Master |
11-Jul-2008 23:17
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Just hope Dow can close above 11040 (minor support). | ||
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stupidfool
Senior |
11-Jul-2008 23:17
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elfinchide is not ur bro.....she is ur sister....lol | ||
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Rustyhaster
Member |
11-Jul-2008 23:14
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elfinchilde bro, i got my chart from yahoo finance lol, FREE hahahaha
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elfinchilde
Elite |
11-Jul-2008 23:09
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edit: apologies for the multiple postings. but here ya go. latest on freddie and fannie: http://money.cnn.com/2008/07/11/news/companies/fannie_freddie_shares/index.htm --note that one of the options of a conservatorship is that shareholders may end up with zero, if the govt steps in to rescue them. yuppers, TA also works for indices. the thing is, where do you get the sti graph from? show the way! 
djia is actually on a triple bottom, if you draw the lines. That's why i say it's range bound and has to decisively break either way out of 11,100 or 11,400. it's just mooning at this range currently. 
(if talking about fast scalps): BBs. well. let's see what they do on mon. i don't know for sure. we're small fries: can only follow. don't get glug glug glug in the aftermath of a wave. if you're a scalper, ya gotta realise that the odds are always against you. so run fast, run small. live chicken, not dead tiger!
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who are the kind of people who keep giving bad post ratings just because we're warning people to be cautious? if you've got evidence, post it out and give your opinion.