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- Valliere: Massive Economic Stimulus May be Ready by Inauguration
- Chandler: Future of SWFs Could Be in Their Own Backyard
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- Busch: How The Auto "Bailout" Scenario Plays Out
- Farrell: Maybe The Hedge Funds Have Sold Enough
- Chadwick: Why I Am So Worried About The Economy
- Farrell: Take The Subprime Losses And Move On
- Pops & Drops: Hewlett-Packard, JP Morgan & Air Wagoner
- Mad Money Green Week: Owens Corning
- Fast & Furious: It's All About Soup
- Web Extra: The Trade on Walmart and RIMM
- Chartology: Grossly Oversold and Favoring the Upside
- The "Armageddon" Gameplan
- What's Next for Citigroup?
- What to Expect From a Geithner-led Treasury
- Value Trading Opportunity of a Lifetime?
- Citigroup's Ills May Signal Market Isn't Near Bottom
- US Inflation Bonds Hit by Deflation, May Recover
- Pros Say: Market Will Drop 5-10% — Ford Will Boom
- Bonds Drop on Profit-Taking, Geithner Move
- Jack Welch on Detroit: Let Them Go Bankrupt
- Bank Shareholders Face 'the Unthinkable': El-Erian
- Heinz Profit Rises, Thanks to Hedging
- AnnTaylor Swings to Loss, Pulls Outlook
- Where the Layoffs Are—Is Your Firm on the List?
The markets will like the government actions regarding Fannie and Freddie. The stock market will rally, the Treasury market will sell off as money is switched back into agency (paper that will carry a yield premium to Treasuries with the same backing.) The dollar will continue its rally and all looks OK with the world.
I would be skeptical of any rally, however. We still have the problems of a glut of unsold homes and what appears to be a deteriorating job environment. There was an article in the Wall Street Journal that said for every 100,000 lost jobs (we have lost 600,000 so far this year), consumer spending gets nicked by about $3 billion. Also, we will have to see if the decline in jobs leads to a further deterioration in the loss ratios on auto loans and consumer credit card portfolios.
The government takeover of F and F was a needed step, but it doesn't end the cycle. We entered into bear market territory a while ago and while it looks like the lows of July could prove to be the lows of this market, a continuation of the volatile trading range is the likely outcome after today's initial reaction on the upside.
Let's enjoy the rally, but I'm skeptical.
Is There Hidden Fannie, Freddie Stock in Your Portfolio?
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Vincent Farrell, Jr. is chief investment officer at Soleil Securities Group and a regular contributor to CNBC. 



