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Fannie to Pay Bonuses of Up To $611K to 4 Execs; Obama Received $105K Contributions

“Fannie Mae plans to pay retention bonuses of as much as $611,000 each to key executives this year as part of a plan to keep hundreds of employees from leaving the government-controlled company.

Rival mortgage finance company Freddie Mac is planning similar awards, but has not yet reported on which executives will benefit…”

Obama Received $105K From Fannie/Freddie…

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Filed under: Economics, Politics, , , , , , , , , , , , ,

Stocks Rally After GE Chief Says They Can Withstand Loan Defaults

US Session Key Developments

  • General Electric Can Withstand Loan Defaults
  • Housing Data Surprises to the Upside
  • Alcoa Slashes Dividend 82% to 3 Cents Per Share

Stocks Rally After GE Chief Says They Can Withstand Loan Defaults

Wall Street celebrated St. Patrick today by finishing the trading session deep in the green after General Electric’s Chief Executive Officer Jeffrey Immelt stated that the company had sufficient reserves to withstand loan defaults. The comments come as a relief after the conglomerate slashed its dividend three weeks ago for the first time since the Great Depression. Surprising Housing and Producer Price data surprised to the upside, leaving traders in an upbeat mood. The prices that manufacturers pay for raw materials rose 0.2% when excluding food and energy with economists expecting the figure to rise by only 0.1%. With these costs now higher, taxable income deteriorates, which in turn allows companies to be more profitable. Sentiment continued its upward trend after housing starts unexpectedly rose 22% in February. As such, KB Home, the fourth-largest U.S. homebuilder advanced 9.3% along with Home Depot, which rose 6.7%. The blue chips could have performed a bit stronger had it not been for an 82% dividend slash from Alcoa, the largest U.S. aluminum maker and a member of the Dow 30, which brought its quarterly cash payout to only 3 cents per share. Nonetheless broader optimism led Financials to perform the strongest. JPMorgan, Wells Fargo, and Citigroup all moved ahead by more than 7.0%.


Dow 30            7395.70         +178.73           +2.48%

The Dow fell in the minutes after opening bell only to rally from thereon. It closed near the day’s high with only one sector finishing the day down, Materials. The sector’s performance is not of particular surprise considering Alcoa’s stock tanked 8.66% after it slashed its dividend by 82% to 3 cents per share.

NASDAQ         1462.11           +58.09              +4.14%
NASDAQ stocks performed the strongest with Information Technology rallying 4.25%. Apple rallied 4.44% after it had let developers preview a beta of the iPhone OS 3.0, which includes cut and paste features and automatic updates.

S&P 500          778.12            +24.23              +3.21%

S&P 500 stocks saw every sector in the index rally by at least 1.74% with Financials surging 6.58%. General Electric was one of the most active stocks, trading 22.74 million shares after its CEO announced that it had adequate capital reserves to withstand loan defaults. The VIX fear gauge couldn’t find enough momentum to fall below the 40 mark; nonetheless it dropped 6.7% to 40.80. Overall, 476 stocks rose with only 24 finishing the day down.

Filed under: Stocks, , , , , , , , , , , , , , , , , , ,

Freddie Mac to Ask For Additional $30.8 Billion From Taxpayers After Losing $50 Billion

“Freddie Mac said Wednesday it will ask the government for nearly $31 billion in additional aid after posting a gargantuan loss of more than $50 billion last year as the U.S. housing market worsened.

The recent loss was driven by $13.2 billion in hedged trades, $7.2 billion in credit losses from the declining housing market conditions and $7.5 billion in writedowns of the value of its mortgage-backed securities. The company also took a charge of $8.3 billion for now-worthless tax credits.”

Obama’s Mortgage Plan Already Benefits Freddie…

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Bernanke Warns of ‘Considerable Uncertainty’ As Stocks Slip a Fourth Straight Day

US Session Key Developments

  • Bernanke Warns of ‘Considerable Uncertainty’ Over Budget
  • Pending Home Sales Fall More Than Expected
  • Small-Caps Substantially Under-Perform Large-Caps

Stocks finished lower for a fourth straight day leaving the index closing sequentially in the red seven of the last eight trading sessions. Price action actually stayed in positive territory for about half of the session with the NASDAQ rising as much as 1.74% before quickly reversing course in the final hour of trading. All eyes were on Chairman Bernanke’s testimony to U.S. lawmakers today. In his remarks, Bernanke stated his case for the $30 billion bailout of AIG, saying “we really had no choice…bankruptcy is just not a good option.” When pressed about the economy, he stated that there was “considerable uncertainty” in many of the assumptions made by President Obama’s budget. Macroeconomic news continued to paint a bleak picture with Pending Home Sales slipping -7.7% with economists expecting less than half of that. December’s estimate was revised substantially lower, from 6.3% to 4.8%. While overall stocks finished the day relatively flat compared to previous days, small-cap stocks actually took a much larger toll when compared to their large-cap counterparts. The top 10 stocks by market capitalization actually rose today by an average of 0.53% while the bottom 10 stocks by market capitalization plummeted by an average of -9.37%.

Dow 30                6726.02                -37.27                  -0.55%
The Dow began the day in the green before a rollercoaster day sent the index in a negative direction. Despite most sectors performing poorly, the Financials actually rose by 1.75% with American Express leading the way after spiking 6.87%.

NASDAQ                1321.01                -1.84                     -0.14%
The NASDAQ grew was much as 1.74% before being weighted down in the final hour of trading. Individual sector performance was diverse in that two-thirds actually finished higher. Information Technology and Health Care finished a hair above water.

S&P 500               696.33                  -4.49                  -0.64%
Utilities in the S&P performed the worst, plummeting -3.58% while Information Technology and Telecommunications rose. Energy also finished the day up after oil jumped $1.50 or 3.74% per barrel. The VIX ultimately fell because the equity indices traded above water for a substantially period. The volatility index fell 3.26% to 40.93.

Filed under: Economics, Stocks, , , , , , , , , , , , ,