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Lots of discussion about the "Fannie/Freddie mystery," i.e.: Why, if the common is worthless, have the stocks rallied 22 percent (for Fannie Mae [FNM
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A couple of points:
1) Merrill Lynch, in a sensible report this morning, noted that capital depletion is not likely for several quarters and that it was "premature" to consider the Treasury recapitalization plan;
Investor 101: |
2) There is less anxiety about the more radical total bailout: Rep. Barney Frank said he doesn't know if a bailout is "inevitable", and Goldman Sachs said yesterday that even if there was a bailout it would be "manageable";
3) Both companies appear to be scaling back on mortgage portfolios, that is they are making some effort to improve their balance sheets;
4) Perhaps most importantly, there are short-term trading patterns that are very favorable in the past few days: higher highs and higher lows, the kind of pattern that attracts momentum traders.
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CNBC's Financials in the News:
- Citigroup [C
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(Story: Citi Limits Color Copying)
- Goldman Sachs [GS
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(Story: Authorities Probe Fidelity, Goldman Link)
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