Friday, February 12, 2010

Financial Headlines 2/12/2010

Yesterday stocks rejoiced on the news that the EU would support Greece, the current black sheep of the highly dysfunctional European family, through its financial crisis. Today stocks are off on Greek "jitters", according to some headlines. In other market roiling news:

  • Since the EU plans to stand united behind its weakest members, news that economic growth stumbled in the final quarter of 2009 was not greeted with enthusiasm by the market. Considering all the monetary stimulus thrown at the region, one would think GDP could muster a bit more than a 0.1% rise.
  • China, a day after announcing a surge in both lending and property prices at bubble-like rates, has unexpectedly tightened lending standards. Investors wondered who they could depend on for the next bubble? If the Chinese can't have a bubble, and the Fed is already thinking about tightening, what's a savvy trader to do? Sell Mortimer! Sell!!
  • Fannie and Freddie announced plans to step up purchases of delinquent mortgages at par. This would be fabulous news for holders of delinquent loans, except that most of these mortgages were trading at a premium. News of the purchases apparently roiled the MBS market yesterday, as traders and investors struggled to quantify the impact of the announcement. As the largest holder of MBS, I'm wondering how much this is going to cost the Fed, since it owns, oh around a trillion or so in agency MBS. Then again, I'm not sure how much spreading losses from one government agency to another really matters...

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