You have to reverse the color of your glasses when looking at the Asian market, red means up, green means down,
If vol doesn't collapse on FNM might be a good idea to short a straddle and buy XLF calls or SKF puts with the proceeds (my theory being that onec news is priced in stock will stabilize until this thing moves through congress but the counterparty confidence/agressive fed/treasury action will inspire a lift in the other finanancials). 10 was selling for 5.30 Friday with a week to go.
i have a few fre jul 15 calls for .25 just as a flyer. i just couldn't sleep with the FNM 15s over the weekend.. i'll likley regret selling them.
The big winners PIMCO, China and Japan. Major owners of bonds in FRE/FNM. Looser: USA taxpayer ! http://www.marketoracle.co.uk/Article5436.html The big concern is "Where does it stop?" Opening up a $15 billion dollar window will be the first of 10 such operations. This is likely the start of a U.S. Taxpayer Bailout of China . Disgustingly it is a U.S. Taxpayer bailout of PIMCO as well. Flashback May 23, 2008. Bill Gross Triples Bet On Mortgages The Financial Times reported Pimco's Bill Gross triples bet on mortgages. Bill Gross, whose Pimco Total Return fund (PTTRX) is the world's largest bond mutual fund, has tripled his bet on mortgage debt, which now comprises about 61 percent of the fund's assets, the Financial Times said on Friday. The chief investment officer of Pacific Investment Management Co said his decision to raise exposure in recent months stemmed from the U.S. government's implicit guarantee of debt issued by Fannie Mae (FNM) and Freddie Mac (FRE), the government-sponsored mortgage financiers. "Government policy is moving to sanctify the status of the government-sponsored agencies," Gross said, according to the newspaper. "It became a question of which institutions would be sheltered by the government umbrella." "Operation Rescue Fannie" has now morphed into a taxpayer bailout of Bill Gross, China, and anyone else that levered into buying Fannie Mae garbage. It is a moral hazard to the highest degree, for bondholders to be made whole in this mess.