If you're wondering why we have been getting these triple digit swings in the Dow every since we hit bottom about July 15th, the answer is evident today with Freddie Mac's earnings. If housing is the key to the recovery, then Freddie's numbers do not indicate any imminent bottom.
Freddie Mac is the most actively traded stock pre-open, trading down nearly 20 percent on over 2 million shares changing hands.
They reported a loss of $1.63 (their fourth straight quarterly loss) a loss of $0.41 was expected. Revenues were $1.69 billion vs. expectations of $2.18 billion, so everything was well below expectations. They are cutting their common dividend but still paying the preferred dividend. Additional provisions for credit losses totaled $2.5 billion due to increases in delinquency rates and foreclosures.
They again said they planned to raise capital, but the timing of the raise depends on market conditions, which are "choppy."
Their CFO says it is still reasonable to expect a housing recovery in the first quarter of 2009.
1) Sprint down 9 percent, earnings of $0.06 vs. expectations of $0.03, but still trading down as wireline revenue was down 2 percent, wireless down 12 percent.
2) Used car sales are dropping fast. CarMaxsaid they had used unit comp sales down 17 percent in June and July; they are reducing inventory and halting most of their new store opening. Down nearly 20 percent on light trading pre-open.
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