FNMA and FMCC preferreds. In search of the elusive 10 bagger.

[DRValue]

my speculation would be that given dividend decision need not be made until 3/31 and Calabria may not be confirmed much before that and mnuchin is real busy on things Chinese right now and collins won't be decided for probably another 3 months, we are going into a multi-week lull now.  at least gasporino is tweeting...

I have found Gasparino's article informative. Not that it says much, or is credible. But the fact that he mentions the WH moving into the lead. There is a chance this information is correct. Yet, a bit misunderstood.

 

That the WH is -or might be- getting involved is a first. Mulvaney, as WH chief of staff, and Calabria, a former WH person himself, both with strong positions on GSEs matters (one wrote a proposed bill, the other one HERA) make Gasparino's unofficial rumors believable.

 

What could be a misjudgment, in my view, is the idea that there is a conflict between Tsy and the WH regarding the direction this may go. Could Tsy instead voluntarily take a step back?

 

Given all we know I find it hard to believe that there is any friction between them and while Gasparino presented the article as somewhat negative, my bias aside, I see it in a positive light.

 

I believe what Otting said in "private".

 

Exasperino has an agenda and will not change his view. His behaviour about this over the years has been reprehensible and done a disservice to the public.

 

What's going on here is that the trump admin is the law and order party and they can't t be seen to break the law. To do that calabria has to be independent, which we all know would never be the case in practice, whoever is fhfa chief.

 

All this talk of calabria changing the system in any big way outside of HERA is noise. I don't see a mandate in there to setup multiple guarantors etc. That's congress and won't happen, or if it does, HERA and legislation aren't mutually exclusive.

[Guest cherzeca]

exasperino it is DR!

 

I think admin will present its plan as something that doesn't preempt congress from engaging in additional reform steps, such as multiple guarantors/govt gtee of mbs etc.  it will almost be something of a challenge...if you want to do it, then do it,  so it is not usurping congress's prerogatives by proceeding to recap/release.  it will point out that the most important reform, eliminating GSE's role as a credit hedge fund holding $1T in mortgages is over.  that would be Calabria's biggest to do, and it is already done.  next step is for Calabria to establish the capital regime and he has already told us (and interestingly Warner asked the question) he won't let perfect be the enemy of good.

 

I think admin will pay a lot of attention to optics and in next month when I think little will actually happen other than Calabria getting confirmed, you will have a lot of "chatter". that chatter will quiet down 

[DRValue]

exasperino it is DR!

 

Really glad you liked that, hopefully it'll stick and become a meme...  :)

 

I think admin will pay a lot of attention to optics and in next month when I think little will actually happen other than Calabria getting confirmed, you will have a lot of "chatter". that chatter will quiet down

 

I don't see what the critics can say about recapping the companies that will stick. Their scrutiny can be easily rebuffed now.

[muscleman]

What does exasperino mean? I Googled that word but can't find it.

[DRValue]

What does exasperino mean? I Googled that word but can't find it.

 

Exasperate + Gasperino.

 

Its a bit of a leap, but I know what i meant lol.

[muscleman]

Got it. Thank you. I don't know who this Gasperino person is, but there seems to be a twitter war between him and Josh Rosner. Is this some important person?

[DRValue]

Got it. Thank you. I don't know who this Gasperino person is, but there seems to be a twitter war between him and Josh Rosner. Is this some important person?

 

Fox business news "journalist" / "personality" who has relentlessly ridiculed fanniegate Twitter but has now started covering the gse's on tv for the past week or so. Basically, as he's covering it, it means something's coming soon.

[rros]

Got it. Thank you. I don't know who this Gasperino person is, but there seems to be a twitter war between him and Josh Rosner. Is this some important person?

The whole thing is irrelevant.

[Guest cherzeca]

Got it. Thank you. I don't know who this Gasperino person is, but there seems to be a twitter war between him and Josh Rosner. Is this some important person?

The whole thing is irrelevant.

[/quote

 

who is "winning" gaspo or Rosner?

[DRValue]

Got it. Thank you. I don't know who this Gasperino person is, but there seems to be a twitter war between him and Josh Rosner. Is this some important person?

The whole thing is irrelevant.

 

who is "winning" gaspo or Rosner?

 

Rosner... Now.

 

https://twitter.com/CGasparino/status/1099689925186912256

 

Exasperino literally admitting his coverage is fake news.

[orthopa]

@IG

 

"it would just squeeze the ownership stake of existing shareholders." 

 

if T goes above 80%, first it would require consolidation of GSE's debt on US B/S.  but apart from that, it would crowd out both existing common and new common. 

 

man, if you are going to raise $150B in the capital markets, you sure dont want to be doing some of the things this board is suggesting.

 

For shits and giggles how do you see/how would you raise capital here cherzeca?

[Guest cherzeca]

@IG

 

"it would just squeeze the ownership stake of existing shareholders." 

 

if T goes above 80%, first it would require consolidation of GSE's debt on US B/S.  but apart from that, it would crowd out both existing common and new common. 

 

man, if you are going to raise $150B in the capital markets, you sure dont want to be doing some of the things this board is suggesting.

 

For shits and giggles how do you see/how would you raise capital here cherzeca?

 

I'll give you my shits and giggles version.

 

1. admin comes out with a plan that has two parts:  a) fhfa director sets capital standard, treasury eliminates senior pref (declaring correctly that it has been paid back as per original terms), and retains investment bank to represent govt in a recap of GSEs; and b) congress is encouraged to consider various additional reform proposals requiring legislation (likely competition and govt mbs guarantee).  admin will want congress to be "involved" though admin will not wait for congressional action.

 

while (b) may adversely affect (a), depending upon what congress might do, I think the market sufficiently discounts likelihood of (b) happening to not worry about it in recap.  of course, potus can always veto anything that congress passes that is antagonistic to protect (a).

 

wildcards:  (a) collins en banc; while I think admin agrees to kill NWS, this ruling will provide impetus if Ps win. (b) does fhfa release GSEs from conservatorship before or after money is raised?  you would think after, but this is where collins comes in...if Ps lose collins, market may not want an almighty conservator in charge of capital raise.  Ps winning collins will make market more indifferent to GSEs remaining in conservatorship during capital raise.

 

I think moelis blueprint discussed how primary and secondary offerings might play out, based upon AIG recap and sell out of treasury position.  AIG is the roadmap that govt's investment banker will follow.

[DRValue]

https://mobile.twitter.com/CGasparino/status/1100049968830865409

 

Exasperino is worse than some on that message board.

 

I really am starting to think he's paid to spread FUD so that as few people get rich as possible.

[SnarkyPuppy]

@IG

 

"it would just squeeze the ownership stake of existing shareholders." 

 

if T goes above 80%, first it would require consolidation of GSE's debt on US B/S.  but apart from that, it would crowd out both existing common and new common. 

 

man, if you are going to raise $150B in the capital markets, you sure dont want to be doing some of the things this board is suggesting.

 

For shits and giggles how do you see/how would you raise capital here cherzeca?

 

I'll give you my shits and giggles version.

 

1. admin comes out with a plan that has two parts:  a) fhfa director sets capital standard, treasury eliminates senior pref (declaring correctly that it has been paid back as per original terms), and retains investment bank to represent govt in a recap of GSEs; and b) congress is encouraged to consider various additional reform proposals requiring legislation (likely competition and govt mbs guarantee).  admin will want congress to be "involved" though admin will not wait for congressional action.

 

while (b) may adversely affect (a), depending upon what congress might do, I think the market sufficiently discounts likelihood of (b) happening to not worry about it in recap.  of course, potus can always veto anything that congress passes that is antagonistic to protect (a).

 

wildcards:  (a) collins en banc; while I think admin agrees to kill NWS, this ruling will provide impetus if Ps win. (b) does fhfa release GSEs from conservatorship before or after money is raised?  you would think after, but this is where collins comes in...if Ps lose collins, market may not want an almighty conservator in charge of capital raise.  Ps winning collins will make market more indifferent to GSEs remaining in conservatorship during capital raise.

 

I think moelis blueprint discussed how primary and secondary offerings might play out, based upon AIG recap and sell out of treasury position.  AIG is the roadmap that govt's investment banker will follow.

 

While I generally agree that this is likely course of action, is it not a fair rebuttal to say congress actions TBD are a strong impediment to efficiently raising capital?  I supppse this is quite literally no different than pre conservatorship where congress could amend charters and convert to explicit guarantee on a whim?

[Midas79]

I supppse this is quite literally no different than pre conservatorship where congress could amend charters and convert to explicit guarantee on a whim?

 

Spot on. There has been no Congressional will to tackle the problem while the companies are in conservatorship and on the brink of needing another bailout, so I can't see anything drastic happening once they are well-capitalized and released.

[muscleman]

I am out again. I don't think the technicals will show immediate jump from here. I'll closely watch this to see if it is worth another shot.

[Midas79]

Calabria's nomination makes it out of committee, but only barely. 13-12 along party lines.

 

Is there any fear of a few Republican Senators breaking ranks? It would only take 3 or 4 to deny Calabria's nomination, and who knows what would happen after that.

[muscleman]

Calabria's nomination makes it out of committee, but only barely. 13-12 along party lines.

 

Is there any fear of a few Republican Senators breaking ranks? It would only take 3 or 4 to deny Calabria's nomination, and who knows what would happen after that.

 

Why does this board go from "Calabria has no problem getting confirmed" a few days ago to "It would only take 3 or 4 to deny Calabria's nomination, and who knows what would happen after that."  :)

Has there been any Trump nominee that was denied?

"13-12 along party lines." is also nothing surprising. Has any Trump nominee not been passing barely along party lines since two years ago?

Seems like you have not been following the US politics lately. There hasn't been anything that the Democrats liked except the Criminal Justice Reform bill. Anything else is being objected no matter what.

For example, when Trump was first elected to office, Democrats were like, "Oh, another Hilter. He will be a war monger." Then when Trump announced troop withdraw from Syria, Democrats were like, "Oh, what a stupid decision, the war should continue."

 

[Guest cherzeca]

if you watched testimony you would come to conclusion that at least some D senators would vote for calabria. turns out politics is a stronger impulse in senate than governance

[muscleman]

if you watched testimony you would come to conclusion that at least some D senators would vote for calabria. turns out politics is a stronger impulse in senate than governance

There is no longer any rational thinking by the Democrats today. The only thing they do is to angrily object anything. I dare say if Trump declares himself as self-identified woman, and therefore the first female president in the US, the democrats will not celebrate, but instead yelling angrily. (Even though they should celebrate, as that seems to be inline with their value.)

[Guest cherzeca]

given the state of politics today, the notion of trump going trans just to piss off Ds doesn't see too farfetched.

[orthopa]

@IG

 

"it would just squeeze the ownership stake of existing shareholders." 

 

if T goes above 80%, first it would require consolidation of GSE's debt on US B/S.  but apart from that, it would crowd out both existing common and new common. 

 

man, if you are going to raise $150B in the capital markets, you sure dont want to be doing some of the things this board is suggesting.

 

For shits and giggles how do you see/how would you raise capital here cherzeca?

 

I'll give you my shits and giggles version.

 

1. admin comes out with a plan that has two parts:  a) fhfa director sets capital standard, treasury eliminates senior pref (declaring correctly that it has been paid back as per original terms), and retains investment bank to represent govt in a recap of GSEs; and b) congress is encouraged to consider various additional reform proposals requiring legislation (likely competition and govt mbs guarantee).  admin will want congress to be "involved" though admin will not wait for congressional action.

 

while (b) may adversely affect (a), depending upon what congress might do, I think the market sufficiently discounts likelihood of (b) happening to not worry about it in recap.  of course, potus can always veto anything that congress passes that is antagonistic to protect (a).

 

wildcards:  (a) collins en banc; while I think admin agrees to kill NWS, this ruling will provide impetus if Ps win. (b) does fhfa release GSEs from conservatorship before or after money is raised?  you would think after, but this is where collins comes in...if Ps lose collins, market may not want an almighty conservator in charge of capital raise.  Ps winning collins will make market more indifferent to GSEs remaining in conservatorship during capital raise.

 

I think moelis blueprint discussed how primary and secondary offerings might play out, based upon AIG recap and sell out of treasury position.  AIG is the roadmap that govt's investment banker will follow.

 

Thanks for the detailed response. I need to re familiarize myself with the AIG recap.

[rros]

if you watched testimony you would come to conclusion that at least some D senators would vote for calabria. turns out politics is a stronger impulse in senate than governance

Although this is how it looked on the surface, my thinking after some digestion was that Democrats would fight against his confirmation throughout.

 

Not that they are afraid of what Calabria could do. Simply they'd much rather extend -as much as possible- this soap opera till next elections. Being their hope -with a few sticks in the wheel- that the status quo remains and perhaps, just perhaps, it all falls unto their laps. Under this scenario, I highly doubt any Republican will join Democrats against Calabria.

[rros]

I am out again. I don't think the technicals will show immediate jump from here. I'll closely watch this to see if it is worth another shot.

Muscle... are you sure you are reading betting odds correctly? If confirmation moves along party lines- and we just had factual data on this-, odds favor Calabria becoming the next FHFA chief.

 

Further, should that happen, Calabria will remember where the loyalty was and who he should respond to. Which, in turn, may mean a nightmare scenario for Democrats.

 

So while this is a high-risk bet, odds aren't against.

 

And I will go as far as saying Mitch McConnell is probably counting and securing votes as you read this.

If confirmation isn't delayed, message to the WH may be we-have-a-winner.

[muscleman]

I am out again. I don't think the technicals will show immediate jump from here. I'll closely watch this to see if it is worth another shot.

Muscle... are you sure you are reading betting odds correctly? If confirmation moves along party lines- and we just had factual data on this-, odds favor Calabria becoming the next FHFA chief.

 

Further, should that happen, Calabria will remember where the loyalty was and who he should respond to. Which, in turn, may mean a nightmare scenario for Democrats.

 

So while this is a high-risk bet, odds aren't against.

 

And I will go as far as saying Mitch McConnell is probably counting and securing votes as you read this.

If confirmation isn't delayed, message to the WH may be we-have-a-winner.

 

I sold yesterday, not today after the 13-12 confirmation. I sold because I see some technical weakness. Therefore i am waiting for another long setup to reenter. Is it possible to miss a sudden big move? Certainly, but I am not afraid of missing moves. I am pretty sure Calabria will be confirmed. No doubt on that.

 

I think it is even more important to follow technicals for this play than any other regular stocks. As the admin said, they are talking to a wide variety of mortgage industry people. Therefore, the admin plan should have been widely known to a lot of people way before they are announced publicly, and they may leak to hedge funds, who will act on the stock and leave their footprint on the chart. The only surprise may come from the court, but that is off the table for the next 2-3 months.

 

If I miss the eventual big move, I am fine with that. There are lots of opportunities setting up right now, so I can just put the money into another name if I miss this one.