Fun with FNM

[longOnUranus]

A broken home: Fannie Mae faces an uncertain future as its accounts unravel

By Andrew Parker and Jenny Wiggins

 

The only way they'll ever figure out what FNM does/did is to do what a novice computer programmer does: take it out of the loop and see what fails. Unfortunately, this is not a computer model which can be patched by a work around.

 

Even more unfortunately, however, to identify the problem, there is no recourse except the above. The "neural" networks that have spawned from it's operations, entwined in all markets everywhere in the unverse as we know it, once unplugged, could not be lobotomized or euthanized.

 

It needs to be dismantled slowly, until a failure in the system occurs.

 

Or... wrapped up in a bigger entity (can you say "Privatized Social Security"???). Thats how LTCM and SandL were "solved". Just find a bigger, shinier wrapper to put under the Christmas Tree.

 

Someday, Santa will actually check his list (twice) for the naughty and nice.

[Charmin]

Well, we need to see the Nasty pull down the other indices, but instead....

if your a bear see what is breaking down and go for it

if your a bull see what is breaking new ground

 

Here's a list of stocks I got from Mr. Breakout from last Friday that had 2X Average daily Volume. This week most seem to have ended positive.

 

Friday Dec. 17 list

 

If I was doing a bear scan I probably would scan for stocks ending down on 2X ADV and see what you come up with.

 

Hey, here's one on the Weekly chart featured by IBD on 12/3 that appears to be breaking down NTAP - 26 to 28 weekly support and major creek going back a few years.

[Charmin]

Last week a utility stock PEG had some real institutional buying and Thursday made a new high above the May 2001 high. I see Mr. IBD didn't add it to his list....

 

and the list goes on and on...

[wndysrf]

Greetings from Louisville, KY

 

2 feet of snow everywhere.

 

Merry Christmas and/or Happy Holidays to all Riverboaters, Hucksters, Shysters, Action Junkies, Gamers, Speculators, Investors, Rail Birds, and all other Gambling Addicts who happen to frequent M2M in 2004.

 

Wonder what Christmas is like at the "Mr. Potato Head" household??

 

Excellent article in the paper on how the SEC, OFHLO, and Armando Falcon steamrolled the FNM Board and the Raines Lobby Machine and fired Mr. Potato Head within HOURS instead of days.

 

Now the SWAT team goes in and performs a "search and destroy" mission inside the Rabbit Hole which leads ultimately to the Nuclear Core of the 900 - story Derivatives Colossus.

 

If the markets go into Full Meltup Mode in January, you will know why.

 

The FEED will be monetizing the FNM HedgeBooks, in an attempt to "recapitalize" the Atomic Particle Accelerator and avoid a Meltdown.........

 

So watch your backs, and keep your eye on the FEED-o-METER.

 

A breakout on JPM will be the key.........

[TURK]

Mark,

What a small world. I live on Floyds Knobs.

 

Turk

[machinehead]

A broken home: Fannie Mae faces an uncertain future as its accounts unravel

By Andrew Parker and Jenny Wiggins

[FNM] needs to be dismantled slowly, until a failure in the system occurs.

 

Or... wrapped up in a bigger entity (can you say "Privatized Social Security"???). Thats how LTCM and SandL were "solved". Just find a bigger, shinier wrapper to put under the Christmas Tree.

<{POST_SNAPBACK}>

FNM, like LTCM, is a 100:1-leveraged, interest-arbitrage hedge fund. But unlike LTCM, FNM has issued a billion dollars worth of publicly-traded securities.

 

Last Friday's partial downgrade of Fannie by a rating agency is the crack of doom. Fannie's business model doesn't work unless it can borrow at the lowest AAA rate. Any risk premium on Fannie's borrowing will allow competitors (Freddie Mac, FHLB) to eat it alive. Or if mortgage yields get pushed up, banksters will be encouraged to retain mortgages for their own account instead of selling them to Fannie for syndication.

 

Fannie Mae, I suspect, is a rancid onion. Each layer that's peeled by the new auditors, the SEC, the Congressional and the Justice Dept. investigations, will reveal another layer inside. Eventually these layers go so deep and so pervasive that you would have to dismantle the financial system to unravel them. Oops! What y'all gonna do then, BenWA?

 

The tragic symphony of Fannie Mae will reverberate for years. All we've heard so far is the opening 'DA DA DA daaaah, DA DA DA daaaaaaahh ...'

 

MH I didn't know you played the viola, MH.

==== I'm fiddling while Rome burns, sucker.

[Guest]

Merry Christmas Stoolizens!

 

 

FNM INTERVENTION

 

Regarding the FNM phantom after hours multi-million dollar stock sale, which Dozer managed to bring to our attention in real time just prior to the Raines announcement on the evening of December 22nd...a couple thoughts:

 

A: These "apparent" transactions did not impact the stock price in the thinly-traded AH - a virtual impossibility if such a trade were to actually occur without some type of major stunt.

 

B: The stock rocketed higher right out of the starting gate the following morning, then was distributed throughout the day at prices much higher than the "apparent" sale price the evening prior.

 

So I'm just going to throw a couple ideas in here to try to make any sense of a totally nonsensical situation, and anyone else is welcome to offer their theory to explain what occured. One thing is certain, those shares that Dozer thought he saw "trade" were not traded by any mechanism available to any mortal man.

 

Let's say for sake of example that JP Morgan knows the whole sad story about FNM, because they helped to create the problem in the first place. The CEO of JPM, The Secretary of the Treasury, Raines, Greenspan, Donaldson and others are all on a secure conference call to try to figure out the best approach to unwinding this mess. A precise plan is scripted with respect to Raines departure and the timing of his announcement. JPM makes it clear that they will work the plan with Treasury (as they have the greatest derivative exposure) but can't afford to take the financial hit of a major loss in their FNM shares AND keep the derivatives tower standing too. Somebody else needs to assume JPM's position in FNM in order to implement the rest of the script.

 

It is agreed that Treasury's 990N account will purchase all of JPM's shares in FNM at the closing price on the 21st, with the entire transaction to occur after hours when nobody is watching. As the stock's price will be unaffected by the transaction, no investors are harmed or helped. With the shares in the hands of the Maestro behind 990N, Raines is free to announce his resignation, and the following morning, 990N starts with the buy-at-market orders in the pre-market in order to ensure a massive pop at the open.

 

As the market opens at 9:30, shorts scramble to cover their positions while 990N continues with their programmed buy-at-market charade for the first couple minutes, and then become massive net sellers into the wave of short covering that peaks at 9:45, at which time 990N is neither a buyer nor a seller, and has unloaded more than half the the JPM shares at prices up to $3 higher than their purchase price.

 

Next, the scripted 990N program kicks in at precisely 10:30, selling the stock down in a perfectly executed sell program from a price of 73.30 down to 71.80 (in order to clear the stops just below $72, and then pops the price back above $72 to provide a support level for the rest of the day's game, all completed to perfection within the one hour program window. (Note the buying wave that hits the tape in the waining hours of trading on the 21st - as JPM insiders with knowledge of the plan jump on board for the pop they know is coming on the morning of the 22nd:

 

 

http://139.142.147.26/GifChartEngine.dll?i...4&refreshrate=0

 

 

By 11:30, it appears that the Treasury's "Unconventional Measures" on behalf of JPM and FNM is complete (at least for the day), and has netted Treasury a handsome profit on their bailout of JPM's market position in FNM - the proceeds from which will be applied to other FNM stick save operations at the next chosen support level of 70 (which it broke intentionally on Thursday to load the boat with short sellers in order to implement the next "buy-at-market" blast at the open on Monday - which will happen to coincide with some positive news that sends the Ten Year Yield lower and forces FNM higher).

 

Now let's just take a little looksie over on the S&P 500 index to see what happened in that arena at precisely 10:30 when the FNM sell program was scripted to kick in, shall we?

 

As we have come to learn, when these boys are running a racket, they never do things in a vacuum. They want to implement their sell program at 10:30, but they need to cause a wave of buyers to hit the tape to sell into. Look what the S&P index does at precisely 10:30 (with a little help from a microburst "buy-at-market" order from 990N to start the stampede - which they of course sell into to unload positions collected from their earlier "price-keeping operations" - making some serious coin along the way):

 

 

http://139.142.147.26/GifChartEngine.dll?i...4&refreshrate=0

 

 

Are you a "Coincidence Theorist," or can we all agree there is an interrelationship between these simultaneous events? Ok good, I'm glad you're still with me. I thought for a minute there that you might have been one of those sheep who believe that we invaded Iraq in retaliation for 9/11.

 

Since THEY have their fingers in all aspects of the market simultaneously, and know with great precision how every bit of disinformation can move stock prices, let's see what vehicle THEY chose to enable all of these moves with such precision at precisely 10:30:

 

 

 

Oil Plummets After U.S. Reports Unexpected Rise in Inventories

 

Dec. 22 (Bloomberg) -- Crude oil fell almost $2 a barrel, the biggest decline in two weeks, after the U.S. Energy Department reported an unexpected rise in inventories.

 

Crude oil for February delivery plunged $1.61, or 3.5 percent, to $44.15 a barrel at 12:37 p.m. on the New York Mercantile Exchange. Crude oil had traded as high as $45.95 a barrel in the moments before the inventory report.

 

 

Oh yeah, that's right...the GOVERNMENT came out with some TOTALLY UNEXPECTED NUMBERS at 10:30 a.m. on the 22nd at the exact same time the sell program on FNM was launched by their robots!!!

 

Wow, is that a coincidence, OR WHAT?

 

I vote for: "OR WHAT?"

 

 

The two most important elements of the US economy are the health of the housing market and the price of a barrel of oil...period. I'm sure it's just a one-time coincidence that they chose one to move the price of the other.

 

 

Feel free to add your own take to this posting, post a cleaner version showing the charts on the page, forward it to the author of the story posted about the mysterious FNM (off the books) stock transaction with the mystery buyer, etc.

 

Let's just expose all of this BULLSHIT for what it is...SHALL WE?

 

Merry Christmas!

[machinehead]

Merry Christmas from all of us at The BAREister Fund

[Guest]

With respect to oil prices and inventories...

 

If my forensic mind was correct that the (Government Manufactured) Oil Inventory Number was pulled out of their ass with the specific intent of jamming FNM and closing the markets at their highs for the year, then they will have to pay the piper at some point (since they can't keep lying as gas stations and homes run out of fuel). If the inventories actually are higher than expected (which I doubt) then the only explanation for it seems to be that a massive draw down of the SPR is under way (which must be replenished at some point), given the disruption in deliveries during the hurricane in the Gulf.

 

Venezuela's announcement that they will be selling some of "our oil" to China does not bode well for our future inventory levels. I think the chart of PVX is telling us that somebody knows the truth about these inventory numbers, and given OPEC's claims that they will begin to cut production within the next couple weeks (given America's "apparent" glut of oil) - something's gotta give, and I think it will come in the form of a shockingly low oil inventories number in the next two weeks.

 

You can only lie about oil until supplies run out...then you're just stupid and cold.

[DrStool]

From Foreclosure to the Cleaners

Consumer advocates say they have seen a number of situations around the country, in which house-rich but cash-poor homeowners desperate to stave off foreclosure end up losing ownership to those who promise to save them.

(By Sandra Fleishman, The Washington Post)

 

http://letters.washingtonpost.com/WBRH041A...36FF7F3F007E3C0

[DrStool]

As a bear, I too am worried about the hyperinflationary implications of a Fannie Mae failure. This could go either way. As wndy suggests, keep your eye on the Feedometer. It has been moving in a hyperinflationary direction. machinenead's rationale rings true to me. This is bullish for metals and commodities, but what does it mean for the stock market?

 

That depends on how fast long term interest rates rise and whether they get to enough of a premium to the inflation rate to suppress stock prices. At any rate, relatively speaking stocks will underperform in terms of real purchasing power. That may not help you if you are short, since they might still rise in nominal terms. If we don't see a clear turn in the 4 year cycle indicators by March, then we could be in one of those classical hyperinflationary banana republic stock market meltups. Stay tuned to the long term indicators and price targets in the weekly long term update in the Anals.

 

Now, if it doesn't rain, I am going to play golf. To those up in the snowy North, Have a wonderful, white Christmas. I'm jealous.

 

NOT.

[machinehead]

Some worthy thoughts from Peter Eliades on why the perfect record of '5' years may be broken next year:

 

At the end of 1974, 1984, and 1994, adviser sentiment had been bearish for a significant percentage of the calendar year.  Unfortunately, we are facing an almost exactly opposite sentiment picture that stands ready to be fuelled to even greater heights of bullishness by siren promises of another great "5" year. 

 

By the end of 1974, there had been 42 weeks in that calendar year when the Investors Intelligence (investorsintelligence.com) survey of investment advisers showed a plurality of bears over bulls. At the end of 1984, there had been 20 weeks showing a plurality of bears over bulls. At the end of 1994, the sentiment statistics had been so amazingly one-sided that there had been 47 weeks with a bearish plurality. It was a perfect set up for a spectacular 1995. 

 

Now we approach the end of the year 2004. What is the current sentiment picture? There was not a single week within the year that showed a plurality of bears over bulls.  In fact, the plurality of bulls over bears remained so steadfast throughout the year that the smallest plurality was 9 percent.

 

High five jive

 

Eliades goes on to note that the low of the year occurred quite early in most '5' years. So, whether 2005 is following the bullish or bearish profile may be clear by February.

[DrStool]

One thing I forgot to note. In spite of manic pumping by the Fed, and massive loan growth in the banking system, the money supply has failed to expand. It's leaking out the back end as fast as they can pour it in the front end. This is the proverbial Fed pushing on a string scenario. So what happens if Fannie, the main engine of credit bubble growth is forced to shrink, as it ultimately must? I don't have the answers. This will be a play as you go in the markets, because, while I give the nod to hyperinflation at the moment, it could tip the other way, in spite of Al's maniacal pumping. Take Japan in the 90's for example. One thing I am certain will deflate is real estate.

 

http://www.realestatebubblewatch.com

[dozer]

I would like to point out another aspect to this scenario, which may be minor, but may turn out not to be....

 

outright bankruptcies.

 

Think about the semi companies.

 

Much of that industry is slowing down TWENTY PERCENT in a SINGLE QUARTER

 

And the 'consumer economy' is just now starting to lose steam!

 

That is a -horrific- rate of slide in one's business! It is truly disgusting how little mention of it has been made in our 'press'. It's a crystal-clear demonstration of how deeply our press has been corrupted into nothing but a propaganda-machine.

 

My point is this: yes, hyperinflation et al can certainly jam the SM up higher; and likely will; yet you -can't- jam up a company which has shut its doors!

 

And I see a whole lotta shakin' going on....

 

Mall retailers are another sector which comes to mind. How many of those silly useless specialty trinket-shops will still be in business a year from now? Only the very high-end ones, I'd wager.

 

Satellite Radio and other 'deluxe' services of that ilk also come to mind. How many of those Beemers will still be on the road 1 or 2 years from now; let alone paying the $50/month sat-radio bill ??

 

The very rich alone are not a large enough subscriber-base to make the payments on the HUGE debt that SIRI and XMSR took on.

 

While the Dow may climb higher, and I suppose the SP as well; I'm having some trouble picturing many of the Nasty stocks doing so....

 

I see an epic wave of bankruptcies coming, -regardless- of what the matrix does with the dollar etc.. Will these failures affect the SM?? If so, how deeply?

 

comments welcome.

[Hiding Bear]

As a bear, I too am worried about the hyperinflationary implications of a Fannie Mae failure. This could go either way. As wndy suggests, keep your eye on the Feedometer.? It has been moving in a hyperinflationary direction.? machinenead's rationale rings true to me.? This is bullish for metals and commodities, but what does it mean for the stock market??

 

That depends on how fast long term interest rates rise and whether they get to enough of a premium to the inflation rate to suppress stock prices.? At any rate, relatively speaking stocks will underperform in terms of real purchasing power. That may not help you if you are short, since they might still rise in nominal terms.? If we don't see a clear turn in the 4 year cycle indicators by March, then we could be in one of those classical hyperinflationary banana republic stock market meltups.? Stay tuned to the long term indicators and price targets in the weekly long term update in the Anals.?

 

Now, if it doesn't rain, I am going to play golf. To those up in the snowy North, Have a wonderful, white Christmas.? I'm jealous.?

 

NOT.

<{POST_SNAPBACK}>

 

I?m with Doc, Mark, and MH on this one. We are at a critical point where either inflation or deflation could become more pervasive. Until proven otherwise, I am sticking 100% with the expectation the result of Fed actions will be inflationary ? but I am read to jump ship when if becomes clear FNM is triggering a chain reaction of defaults.

 

The typical year-end activity is exactly the best time for the Fed to obfuscate its real monetary goals. Surprisingly, on a panic level of 1 to 10 (where 1 is an annoying concern and 10 is a 9/11 type event) the Fed is only at a 3. Obviously concerned but not doing a great deal about it. That could change in a matter of hours if necessary.

 

Foreign central banks have continued to accumulate ?agency? securities, which may include FNM, for about 10 weeks now. Keep in mind that Euroland and some other central banks are dumping their agencies at the same time ? so this strange activity can be coming from no one other than Uncle Fukui at the Bank of Japan. Apparently the BOJ sees its mission to stick save not only the US$ when necessary but the whole US mortgage system. Of course that won?t work when FNM fails to produce financial statements and FNM start to be regularly downgraded.

 

Ultimately FNM will be nationalized in some form. It?s just a question of how long, who takes it over, and whether the bond and stockholders will be made whole.

 

PS Merry Christmas!