We believe that the political establish has prepared a solution for the subprime mortgage problem and the solution will be announced today by the President at 11:15 Est. Wall St. seems to know something and the stocks are moving in premarket.
We reported here earlier in the week that we thought there would be an early morning bear raid, and we reported here that the sell off on Tues. was a setup for today. It appears that the Fed along with its partners is bear hunting and the market has already gapped up on the expectation of bear traps being sprung today.
CFC is trading higher in premarket on strong vol. of 426,400 shares up at $20.99.
We saw Thornburg Mortgage sell $500 million in preferred stock at a 10% yield on Thurs. How can a company borrow at 10% and lend at 7%, so clearly something is "funny" about this transaction.
We are hearing that Fannie Mae and Freddie Macs limits will be increased from $417,000 to some higher number. This makes perfect sense for Thornburg to sell the stock since they make jumbo loans and the Fannie Mac and Freddie Mac limit increases would directly benefit a jumbo mortgage lender such as Thornburg.
Otherwise the transaction makes no economic sense.
Something is going to happen today in the markets.