FNM (Fannie Mae) tanking big:

Discussion in 'Stocks' started by capmac, Sep 28, 2005.

  1. Biog


    When it traded below bottom trendline line $58-60 earlier this year- FNM gave a good long term short signal.
    #11     Sep 29, 2005
  2. people laugh at jim rogers. he has been short this thing for years. its payday.
    #12     Sep 29, 2005
  3. zdreg


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    October 2, 2005 -- WHAT if the stock of one of the most widely held "blue chip" companies in America cratered on a given trading day, erasing 11 percent of its market value — or nearly $5 billion — in one fell swoop.

    What if almost no one noticed?

    Furthermore, what if those few who did pay attention were at a loss to explain what precisely led to the panicked sell-off?

    Well, that exact scenario played out last week, when shares of Fannie Mae, the giant mortgage lender, nose-dived in their worst trading session since the crash of 1987.

    Even if you don't own a share of Fannie or any other stock, the market signals on this one are worth watching.

    Call it Tropical Storm Fannie. Not quite a hurricane yet, but a storm that threatens to become an economic disaster on par with Rita and Katrina.

    That's because Fannie Mae is not your average Fortune 500 company.

    Chartered by Congress, Fannie is the largest source of money for American homes. Along with its sibling Freddie Mac, the two own or guarantee about $3.8 trillion in mortgage debt. Quite simply, Fannie Mae is as good a proxy for the housing sector as it gets.

    And with its stock down 40 percent this year, despite the residential real estate boom (although the stock did rebound a bit after Wednesday's carnage), one has to wonder what ails Fannie, and what is she trying to tell us?

    There are two answers to that question — neither of them all too comforting.

    On the one hand, a massive ongoing federal probe into Fannie's accounting practices has yielded more questions than answers about how and how much books were cooked.

    Dow Jones reported this week that federal regulators have uncovered "new and pervasive accounting violations."

    With $1 trillion of debt on its books (only Uncle Sam has more IOUs), any real problems at Fannie would be a financial disaster in the making — a credit crisis that would make the Long Term Capital fiasco look like child's play.

    On the other hand, if things aren't really so bad behind Fannie's veil of secrecy, the stock may merely be forecasting a sharp rise in mortgage rates and a crack in housing prices — not exactly a rosy scenario either.

    Whatever the case (and we'll soon find out) Fed Chairman Alan Greenspan has himself covered.

    Recently, he's been turning up the volume on his campaign to reform Fannie Mae and Freddie Mac, and this week he made some of his strongest remarks ever on the risks of the rising home prices and mortgage debt over the past decade — noting that a cooling of the housing market would be a far greater threat to consumers and the economy than would higher energy prices.

    Of course, Greenspan has cried wolf before, but as a savvy student of the markets he also, no doubt, has been watching the precipitous plunge in Fannie Mae shares of late, and the more recent sell-off in the homebuilding and mortgage-lending stocks, and wants to get ahead of the news.

    Suffice it to say, if the chart of Fannie Mae stock is any indication, Mr. Market is predicting at least a Category 3 storm headed in our direction.

    TERRY KEENAN is anchor of Cashin' In, an investing program that appears on Fox News Channel on Saturday mornings at 11:30. E-mail terry.keenan@foxnews.com.

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    she should have given jim rogers credit for a great call which he repeated many times.
    #13     Oct 2, 2005