Fannie Mae’s earnings report (FNM):
REPORTS Q1 -$2.57 V -$0.81E; R $3.77B V $2.62BE; SEES ‘09 CREDIT LOSSES "LARGER THAN 2008"
-States needs to raise $6B in new capital
-Puts Q1 credit loss expenses at $3.2B
-Sees 50% dividend cut to $0.25/share in Q3
-Sees home prices declining 7-9% nationally this year.OFHEO DROPS CONSENT ORDER WITH FNM, INTENDS TO CUT CAPITAL SURPLUS REQUIREMENT TO 15% IN SEPTEMBER FROM 20% CURRENTLY
That doesn’t stop Moody’s from letting them keep their AAA rating, but downgrades financial strength rating to B from B+, outlook negative. Whatever.
1 Comments
May 6th, 2008 at 4:36 pm
Fannie is up almost 5% on very big volume today. I would have expected it to be up a bit more based on the news. Investors just don’t care about credit losses, write-downs, rating changes, etc. It would take something completely different…..something that noone has been thinking of…for the financials to lose their grip. When stocks go up on bad news…..beware! It is trying to tell you something.
I am perilously close to being stopped out on DUG. My emotions say that this trade should work, but the tape is what is important. In this case, discipline will need to triumph over emotion. I will keep my stop in place.
I went long a stock STAR last night. I will continue to add a bit more long exposure as long as the S&P remains above 1410.