Stop Trading!: A Fannie Mae-White House Deal?
Fannie Mae and the White House might be working out a backroom deal, Cramer said during Tuesday’s Stop Trading!, that would allow the company to clear some of its own troubled mortgage paper off the market.
There’s a chance that Fannie Mae and Freddie Mac’s excess-capital requirements could be loosened. That means, Cramer said, the $10 billion Fannie has on hand could be leveraged for up to $100 billion to buy its own bonds. The move might help the markets, he admitted, even more than the Federal Reserve’s 75 basis-point rate cut Tuesday afternoon.
Not that Cramer didn’t welcome the Fed move. It’s still "entirely possible to get another 400-plus day," he said. The Dow was up 343 points with about a half hour left to trade.
Still, if the central bank had acted much earlier – August, perhaps? – we might be asking for a rate tightening rather than a steep cut. But "they got it so wrong,” Cramer said, now “they have to do everything in a panic mode."
Cramer also said that, after the sweet dealJPMorgan Chase got for Bear Stearns, other banks like Wells Fargo must be “lining up” with the Fed for their chance. Buying WFC on that chance could be a “great trade,” he said.
So what will actually work in this market? Visa’s IPO hits the market Wednesday. "Wall Street wants this deal to work and work big," Cramer said. So he recommended investors try to get in on it. If they can’t Visa shares $42-$43, Cramer recommended going with Mastercard instead.
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