Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
Where’s my self-driving car? - 16th Aug 22
Real Reason why Pakistan and India Gained Independence in 1947 at 75th Anniversary - 16th Aug 22
Electronic Payments Can Benefit Your Business - Here’s How - 16th Aug 22
Qualcom Stock Market Harbinger - 12th Aug 22
Apple Exec Gets World's 1st iPhone 14 for Daughters 14th Birthday Surprise Present Unboxing! - 12th Aug 22
Steps to remember while playing live roulette online - 12th Aug 22
China Bank Run Protests - Another Potential Tiananmen Square Massacre? - 11th Aug 22
Silver Coin Premiums – Another Collapse? - 11th Aug 22
Gold-to-Silver Ratio Heading Lower – Setup Like 1989-03 - 11th Aug 22
Severe Stocks Bear Market: Will You Be Among the Prepared 1.5%? - 11th Aug 22
There's a Hole in My Bucket Dear Liza, UK Summer Heatwave Plants Watering Problem Song - 11th Aug 22
Why PEAK INFLATION is a RED HERRING! Prepare for a Decade Long Cost of Living Crisis - 9th Aug 22
FREETRADE Want to LEND My Shares to Short Sellers! - 8th Aug 22
Stock Market Unclosed Gap - 8th Aug 22
The End Game for Silver Shenanigans... - 8th Aug 22er
WARNING Corsair MP600 NVME2 M2 SSD Are Prone to Failure Can Prevent Systems From Booting - 8th Aug 22
Elliott Waves: Your "Rhyme & Reason" to Mainstream Stock Market Opinions - 6th Aug 22
COST OF LIVING CRISIS NIGHTMARE - Expect High INFLATION for whole of this DECADE! - 6th Aug 22
WHY PEAK INFLATION RED HERRING - 5th Aug 22
Recession Is Good for Gold, but a Crisis Would Be Even Better - 5th Aug 22
Stock Market Rallying On Slowly Thinning Air - 5th Aug 22
SILVER’S BAD BREAK - 5th Aug 22
Stock Market Trend Pattren 2022 Forecast Current State - 4th Aug 22
Should We Be Prepared For An Aggressive U.S. Fed In The Future? - 4th Aug 22
Will the S&P 500 Stock Market Index Go the Way of Meme Stocks? - 4th Aug 22
Stock Market Another Upswing Attempt - 4th Aug 22
What is our Real Economic and Financial Prognosis? - 4th Aug 22
The REAL Stocks Bear Market of 2022 - 3rd Aug 22
The ‘Wishful Thinking’ Fed Is Anything But ‘Neutral’ - 3rd Aug 22
Don’t Be Misled by Gold’s Recent Upswing - 3rd Aug 22
Aluminum, Copper, Zinc: The 3 Horsemen of the Upcoming "Econocalypse" - 31st July 22
Gold Stocks’ Rally Autumn 2022 - 31st July 22
US Fed Is Battling Excess Global Capital – Which Is Creating Inflation - 31st July 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Financial Markets Make Stunning Reversals Following Fannie and Freddie Takeover

Stock-Markets / Credit Crisis 2008 Sep 08, 2008 - 01:22 PM GMT

By: Mike_Shedlock

Stock-Markets

Best Financial Markets Analysis ArticleI went to bed at 4:00 AM. At the time....

  • Treasuries were absolutely getting crucified
  • The Dollar was sinking vs. the Euro
  • Nasdaq Futures were up 40 points
  • S&P Futures were up 38 points
  • Gold was soaring

At 10:30 AM
  • The long bond is flat with a minor selloff on other parts of the yield curve
  • The Dollar is green vs. the Euro
  • Nasdaq futures are -15
  • S&P futures are +16
  • Gold is flat and the $HUI is getting crushed after a strong opening
I just got off the phone with the Wall Street Journal asking me for comments. This is what I said:

I went to bed thinking "This is insanity. Fannie and Freddie equity holders are going to be wiped out. If the Fed bails out any other financial institution equity shareholders will also be wiped out. Thus it makes no sense for financials to rally on this news."

It took the market all of the opening bell to come to this conclusion. Let's take a look at two institutions very likely to fail.

Lehman 5 Minute Chart


Washington Mutual 5 Minute Chart


Wachovia 5 Minute Chart


As of 11:00
  • Lehman (LEH) -18%
  • Fannie Mae (FNM) -85%
  • Freddie Mac (FRE) -80%
  • Washington Mutual (WM) - 16%
  • Merrill Lynch (MER) -2%
  • $HUI -3%
  • Wachovia (WB) +5% and falling rapidly
Let's see how Fannie and Freddie preferreds are trading. The following two charts are courtesy of Chris Puplava at Financial Sense .

Fannie Mae Preferred


That is a chart of one Fannie Mae preferred issue. Down 13.6 points to 4. In June it was trading over 30.


That is a chart of one Freddie Mac preferred issue. Down 13 points to 3. In June it too was trading over 30.

Fannie & Freddie Preferreds


The above chart is of various Fannie and Freddie preferred issues. That char is courtesy of Bennett Sedacca and Minyanville .

Who Thought Wrong?
  • Those who thought preferred shareholders would be saved thought wrong.
  • Those who thought gold would rally strong on the news thought wrong.
  • Those who thought the dollar would collapse on the news thought wrong.
  • Those who thought treasuries would be massacred on the news thought wrong.

What an amazing day but it's not over yet. The casino is still open. In weekend action, Paulson Rolled The Dice At Taxpayer Expense . Today after a strong opening, it's looking like snake eyes for both the taxpayer and equity holders.

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

© 2008 Mike Shedlock, All Rights Reserved

Mike Shedlock Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in