US - Economic Data & News 01 (May 08 - Jul 08)

Re: US Economic Data & News

Postby kennynah » Wed Jul 16, 2008 12:49 am

Paulson Tells Congress Treasury Has "No Immediate Plans" To Lend To Fannie And Freddie
7/15/2008 12:27 PM ET


(RTTNews) - There are "no immediate plans" to access the lending window made available to government-sponsored mortgage giants Fannie Mae (FNM: News, Chart, Quote ) and Freddie Mac (FRE: News, Chart, Quote ), Treasury Secretary Henry Paulson told Congress Tuesday. Recognizing that the financial market turmoil that began last August will take "additional time to work thorough," Paulson attempted to ease fears surrounding the recent activity with the mortgage lenders.

U.S. financial institutions are "repricing risk, de-leveraging, recognizing losses, raising capital and seeking to improve their financial positions," Paulson said in prepared testimony before the Senate Banking Committee, adding that monetary policymakers are working to address the challenges brought on by the collapse of the housing market and the unraveling of the credit markets.

Fannie and Freddie are working through this challenging period, Paulson said, noting that the mortgage lending giants occupy a "central role" in the housing finance system, one they must continue to play "in their current form as shareholder-owned companies."

There has been speculation about the fate of Fannie and Freddie, with a number of scenarios being offered by experts from bankruptcy to a government bailout, from a brief period of turmoil to outright nationalization. Paulson maintained that the government will assist the lenders as needed, due to the large role Fannie and Freddie pay in the mortgage market.
The two mortgage lenders "now touch 70 percent of new mortgages and represent the only functioning secondary mortgage market," he said, adding that they are "central" to the recovery of the current housing slump.

"Continued confidence in the GSEs is important to maintaining financial system and market stability," Paulson added.
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Re: US Economic Data & News

Postby millionairemind » Wed Jul 16, 2008 7:09 am

K - my immediate feel about the news above is what they did on Sunday was preliminary damage control, catch the shortists off guard and those who started the rumour in the act and force them to cover.... so as to buy themselves time...Remember, Hank was formerly head of GS and he also knows how to play this game :mrgreen:
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Re: US Economic Data & News

Postby winston » Wed Jul 16, 2008 8:22 am

winston wrote:What would be the catalyst that would create a reversal in the markets ?
(truncated )
3) If there is free fall in the market, they could also temporarily disallow short-selling or only on an uptick



SEC rule will limit short sales
By Rachelle Younglai and Emily Chasan

WASHINGTON/NEW YORK (Reuters) - U.S. securities regulators plan to issue an emergency rule later on Tuesday to limit certain types of short selling in major financial firms, including Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz).

The rule is the latest effort by the U.S. Securities and Exchange Commission to clamp down on market manipulation that some blame for the demise of investment bank Bear Stearns in March.

The rule is expected to go into effect on Monday and last 30 days. It also applies to big financial firms such as Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz), Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz), Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) and Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz), the SEC said.short sellers arrange to borrow shares they consider overvalued and sell them in hopes of making profit when the price drops.

With financial stocks dropping dramatically over the year, lawmakers have been calling on the SEC to investigate whether short sellers and speculators are behind the move.

Over the weekend, the SEC announced plans to crackdown on false rumors and said it is examining whether broker dealers and investment advisers have controls in place to prevent market manipulation.

The agency's rule change would prevent investors from making "naked" short sales of the biggest financial stocks. A "naked" short sale occurs when an investor sells stock that has not yet been borrowed.

Broker-dealers will sometimes accidentally fail to deliver stocks to investors who have arranged to borrow a stock. If it is done intentionally, it is illegal.

The emergency rule would require a short seller to borrow the securities before executing the sale. It would also require the investor to deliver the securities on the settlement date.

"The new rule will benefit the investment community and help bring more stability to the market," said Dylan Wetherill, president and founder of short interest tracking service ShortSqueeze.com.

"This rule would help relieve the extreme downward pressure on stocks, that has helped fuel the market down to these levels," he said.

Broker-dealers will sometimes accidentally fail to deliver stocks to investors who have arranged to borrow a stock.

As of June 30, short sellers held about 14 percent of Fannie's outstanding stock, up from around 3 percent last August. For the same time period, shorts held almost 12 percent of Freddie's outstanding stock, up from about 2.7 percent. They also held about 10 percent of Lehman's stock, up from 4.5 percent.

Short sellers say they prevent stocks from becoming overvalued and are an essential feature of the market.

"While no one in Washington did their job, now they are trying to blame short sellers," said William Fleckenstein, president of Fleckenstein Capital, which manages a Seattle-based hedge fund.

"Short sellers don't make stocks go down, if a short seller was trying to push a stock to a price where it didn't belong, it would come back right away," said Fleckenstein, who is not currently short the investment banks or Fannie or Freddie. He had a short position on Fannie, which he covered on Tuesday.

SEC Chairman Christopher Cox told a Senate Banking Committee hearing that the emergency rule would be more effective than the so-called tick test rule, which was repealed June 2007.

The tick test rule only allowed short sales when the last sale price was higher than the previous price. That meant a trader could not short a stock if the movement prior to the short sale is down.

Cox said the SEC is going to look at whether some other kind of a price test might be useful for "circumstances such as those we find ourselves in now."

"We are very open to that," said Cox.

The rule, adopted a decade after the 1929 stock market crash, was designed to prevent short sellers from adding to the downward pressure on a stock that is already falling sharply.

The SEC has already proposed another rule to curb naked short selling abuses and prevent market price manipulation. It is not known when the SEC will adopt this rule.
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Re: US Economic Data & News

Postby millionairemind » Wed Jul 16, 2008 9:29 am

W - You super zhun man!!!! It pays to listen to Lao Jiao like you :D
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

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Re: US Economic Data & News

Postby Aspellian » Wed Jul 16, 2008 9:35 am

are we finding a temporary bottom soon?

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Re: US Economic Data & News

Postby millionairemind » Wed Jul 16, 2008 9:42 am

Bernanke highlights risks facing US economy
By Krishna Guha and James Politi in Washington and Michael Mackenzie in New York
Published: July 15 2008 15:19 | Last updated: July 15 2008 21:38

Ben Bernanke highlighted the “numerous difficulties” facing the US economy in a sobering testimony on Tuesday that sent markets on a rollercoaster ride as he signalled serious risks on both the growth and inflation fronts.

The Federal Reserve chairman told Congress that strains in financial markets, declining house prices, a weaker labour market and higher oil prices were all putting pressure on the outlook.
Shares in the US – already weak before Mr Bernanke spoke – fell sharply, before rallying on a substantial decline in oil prices.

But the main European and Asian markets fell sharply throughout the day with financial stocks particularly hard hit. In London the FTSE 100 closed down 2.4 per cent at 5,171.9, its lowest level since October 2005.

By the close, oil had slumped to $138.74 a barrel after trading at an early high of $146.73. As oil slid, the euro, which hit a record high of $1.6038 in earlier trading, eased back.

Gold rallied to its highest level in four months.

Promising that the Fed would continue to view restoring the financial markets to health as “a top priority”, Mr Bernanke said policymakers believed that the risks to growth were “skewed to the downside”.

But he said the inflation risk had “intensified lately” with continued increases in oil and other commodity prices that would push overall inflation higher in the short term.

Mr Bernanke said it was “critical” that policymakers prevent higher inflation from becoming entrenched in the shape of higher inflation expectations that would feed into domestic wage and price-setting.

The Fed chairman said he was less concerned about the possiblity of widespread bank failures than he was about the prospect that banks would cut back on lending to the economy as they absorb losses and try to reduce their leverage.

Mr Bernanke’s comments came as President George W. Bush said the debt of Fannie Mae and Freddie Mac, the mortgage finance groups, had an “implicit government guarantee”.

Later, Hank Paulson, Treasury secretary, urged Congress swiftly to implement legislation that would give the Treasury unlimited temporary authority to lend money to Fannie and Freddie or to invest in their equity.

Joshua Shapiro, chief US economist at global market consultants MFR, said the market was troubled by the omission from Mr Bernanke’s testimony of any reference to the idea that the downside risks to growth had diminished.

Alan Ruskin, chief international strategist at RBS Greenwich Capital, said there was a “major battle of priorities” at the Fed, and the upshot was likely to be that interest rates would stay on hold for at least the next six months, unless inflation expectations picked up.

The fall in oil prices helped reverse some of the selling pressure that hit stocks hard at the start of trading.

At one stage the S&P 500 slumped 2.3 per cent and traded at 1,200, its lowest since October 2005. The S&P later closed 1.1 per cent lower at 1,214.91.
Copyright The Financial Times Limited 2008
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Re: US Economic Data & News

Postby bertyeo » Wed Jul 16, 2008 1:00 pm

talk is cheap......
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Re: US Economic Data & News

Postby bertyeo » Wed Jul 16, 2008 1:01 pm

here comes usd 1.30 liaoz
precious metlas like gold are creeping up :shock:
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Re: US Economic Data & News

Postby kennynah » Wed Jul 16, 2008 1:20 pm

millionairemind wrote:K - my immediate feel about the news above is what they did on Sunday was preliminary damage control, catch the shortists off guard and those who started the rumour in the act and force them to cover.... so as to buy themselves time...Remember, Hank was formerly head of GS and he also knows how to play this game :mrgreen:


mm : sure does look it.... anyways, not important what they do eventually, but what the mkt thinks the economic effects will be if the US Treasury extends or does not extend the loans...

it appears people want stability restored, so when govt recently said this and that abt fan/fred, we saw some short coverings/buyings on mon/tues....

it appears to be to be like "I want to believe" ; one of my X Files avatar....maybe mkt is just saying..."i want to run, just give me a reason"..... later, may draw some ang kong on post on US Mkt Direction...to try to substantiate what i said...
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Re: US Economic Data & News

Postby kennynah » Wed Jul 16, 2008 8:50 pm

Mortgage Applications Edge Up
7/16/2008 8:45 AM ET


(RTTNews) - Industry data released on Wednesday showed that mortgage application volume edged up last week, thanks to an advance in refinancing activity. Purchase activity for the week ticked down.

The Mortgage Bankers Association revealed that its market index of mortgage application volume climbed 1.7 percent for the week ended July 11. The advance was led by a 6.9% increase in the refinancing index. Mortgage purchase activity slipped by 1.7 percent, the survey revealed.

The Market Composite Index was 522.2, a significant increase from 513.4 in the previous week. On an unadjusted basis, the increase was greater - up 27 percent on a week-to-week basis, although it declined 17.4 percent on a year over year basis.

The Refinance Index jumped 6.9 percent to 1474.9 from 1379.3 last week. Accordingly, 39.2 percent of mortgage activity took place through refinancing last week, up from 37.3 percent in the previous week. The conventional and government purchase indices saw mixed results, with the conventional purchase index ticking up 1.4 percent and the government purchase index, largely made up of FHA loans, declined 8.2 percent.

The adjustable-rate mortgage share made up less than 10 percent of total activity, down to 9.1 percent from 10.0 percent of total applications last week.

Interest rates decreased across the board for all kinds of mortgages. They slipped from 6.43 percent to 6.22 percent on the 30-year fixed-rate, from 5.94 percent to 5.74 percent for the 15-year fixed-rate, and from 7.24 percent to 7.16 percent for the one-year ARM.
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