Stocks are undecided today, but markets are gaining. Dow is up 49, advancers are a little ahead of decliners & NAZ is up 19. A lot is going on! Financing issues for Fannie Mae (FNM) & Freddie Mac (FRE) are front & center. These gov sponsored enterprises (GSE) have tons of debt to finance their assets, mortgages. Their stocks are trading at 17 year lows, FNM 13.67 & FRE at 8. These declines are just after Treasury Secretary, Henry Paulson, said the market can't expect the government to bail out troubled financial companies. Their future has now became clouded so gov is getting involved, both administration & congress. This is becoming a huge mess which could bleed to others in the financial community.
Oil is back up, this time 1.80 to almost 138 on supply worries (what's new?). The picture for jobless claims improved but labor conditions continue weak. Home foreclosures in June rose 53% from last year as the housing depression continues. Gloomy economic news keeps coming.
Dow (DOW) will buy Rohm & Haas (ROH) for $15B, ROH is up 29 on the news because of the 74% premium. At other times, this is the kind of news that spreads to the entire market. Not today. First Industrial Realty (FR), highlighted in my right column, had its biggest gainer day on Tues (like all REITs) followed by the biggest daily decline in history yesterday. REITs are a nice place to park money during this turmoil, 8+% yields are common & many should be fairly secure. But high volatility in markets is becoming routine, not good for the short term.
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