Tuesday, November 11, 2008

Fannie/Freddie To Announce Loan Modifications

The market is lower this morning on continued reductions in earnings estimates and general macroeconomic concern. Google (GOOG) had its earnings estimates reduced by Goldman, and several other companies are seeing reductions in their earnings estimates as well.

Starbucks (SBUX) reported earnings that were below expectations, and well down from last year's levels. Maybe consumers are even scaling back on $4 lattes, especially when you can get ones at McDonald's now.

On a positive note, the WSJ reported that Fannie and Freddie are expected to announce plans today to modify hundreds of thousands of loans held by the GSEs. The plan is also being backed by Treasury, with the aim of bringing down the ratio of household debt to income down to 38%.

Citigroup will also announce plans to help prevent foreclosures, including modifying mortgage terms for up to 500,000 homeowners. I have heard they might lower mortgage rates to 1-2% for up to 2 years. Um, can I get in on that?

Asian markets were lower across the board overnight. The dollar is up sharply vs. the Euro today, and the Yen is up slightly. This is pressuring commodities, with oil falling again, now below $59.

The 10-year yield is flat at 3.75%. And the VIX is up +7% to 64.

long C calls


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