The Fed’s FOMC announcement came out…

We got exactly what I expected, a kind of wishy-washy, “hedging our bets” statement from the Fed. You have to remember that Bernanke was Greenspan’s right hand man for much of the bubble days of the ‘90s and early ‘00s, so the guy is an expert at walking both sides of the line when it comes to policy and public statements.

For instance, the Fed announced it would keep interest rates between 0% and 0.25% for an “extended period.” No surprise there. As I’ve noted previously, 80%+ of the $200+ trillion in derivatives sitting on US commercial banks’ balance sheets are related to interest rates.

For the Fed to hint at raising rates (let alone raise them) would kick off a systemic implosion that would wipe out the very guys the Fed has been bailing out. Suffice to say the Fed won’t be raising interest rates …

WMGI, Wright Medical Group Inc.

AFN, Alesco Financial Inc.

DrStockPick Watch List!

 

DrStockPick Watch List! for Tuesday August 18, 2009

 

My Picks for Tuesday August 18, 2009 are:

**************************************************************

WMGI, Wright Medical Group Inc.

WMGI is a global orthopaedic medical device company specializing in the design, manufacture, and marketing of reconstructive joint devices and biologics.

WMGI’s product offerings include large joint implants for the hip and knee; extremity implants for the hand, elbow, shoulder, foot and ankle; and both synthetic and tissue-based bone graft substitute materials.

**Today after Closing Bell, WMGI announced the launch of its patent pending CORETRAK™ Articulating External Fixator. The CORETRAK™ articulating fixator design is well-suited for challenging

...

AFN, Alesco Financial Inc.

CNOA, China Organic Agriculture Inc, CNOA.OB

PennyOmega.com Watch List!

PennyOmega.com Watch List ! for Tuesday August 18, 2009

Our Picks at PennyOmega.com for Tuesday August 18, 2009 are:

**************************************************************

AFN, Alesco Financial Inc.

AFN is a real estate investment trust (REIT). Unlike many REITs which own real estate directly, AFN makes investments in real estate-related and other securities.

AFN’s portfolio consists of investments in Trust Preferred Securities, Mortgage Backed Securities and Corporate Loan Obligations.

AFN is externally managed by Cohen & Company, a leading investment banking and asset management firm focusing on lending to the real estate and financial services industries.

**Today after Closing Bell, AFN reported Generally Accepted Accounting Principles (GAAP) net income attributable to common

...

Lots of transactions went on in central banking over the past month or so, not only in the United States but in the UK and Europe. Quantitative easing is the game and, at least, the central bankers are getting more and more comfortable with this.

Credit is given to quantitative easing for the drop in the dollar LIBOR rate. The three month LIBOR now ranges between 50 and 60 basis points over the target Federal Funds rate chosen by the Federal Reserve. This is the lowest this spread has been in a long time. For the five years previous to September 2008, the time the financial markets collapsed, this spread averaged between 20 and 30 basis points.

This move reflects the efforts of the Bank of England and the European Central Bank to push short term interest rates lower and to engage in monetary actions that

...

Last week President Obama unveiled his Make Housing Affordable Plan (MHA), which helps those homeowners who either owe more money than their house is worth, or who face imminent risk of default.   Those owing between 80% and 105% of their house may refinance at a low, fixed-rate for 15 or 30 years.  Those who are in default or face imminent default may be eligible to restructure their mortgages with interest rates as low as 2%, loan terms as long as 40 years, and principal reductions.  The government will also reduce principal by $1,000 per year if borrowers remain current on the lower, updated loan payment for up to five years. There are many who claim that this plan increases moral hazard, and will create an artificial bottom which will only temporarily delay the market from finding a true market bottom.  These

...

Hardly a day goes by without another government bailout plan, and this week was no different. In Arizona on Wednesday, President Obama rolled out a plan designed to reduce foreclosures.

The multipronged plan has several moving parts. Since it could have an impact on both your personal finances — and your investing strategy — I want to give you some straight talk on it right here in Money and Markets.

First, let’s start with some background …

On Wednesday, President Obama rolled another bailout plan. …

This is an email that has been floating around the Internet.Mortgage Backed Securities are like boxes of chocolates. Criminals on Wall Street stole a few chocolates from the boxes and replaced them with turds. Their criminal buddies at Standard & Poor rated these boxes AAA Investment Grade chocolates. These boxes were then sold all over the world to investors. Eventually somebody bites into a turd and discovers the crime. Suddenly nobody trusts American chocolates anymore worldwide. Hank Paulson now wants the American taxpayers to buy up and hold all these boxes of turd-infested chocolates for $700 billion dollars until the market for turds returns to normal. Meanwhile, Hank's buddies, the Wall Street criminals who stole all the good chocolates are not being investigated, arrested, or indicted. Mama always said: 'Sniff the chocolates first, Forrest'.

Amidst all the $250 billion bailout hoopla, and the previous news that the government will buy up both whole loans and Mortgage Backed Securities, in an effort to drive financing costs DOWN, something interesting is going on -- and I don't see many people talking about it. Home mortgage rates aren’t falling. They're going UP.The average rate on a 30-year fixed mortgage jumped to 6.47% in the week of October 10, according to the Mortgage Bankers Association. That was up from 5.98% a week earlier and just shy of the August high (6.58%, itself the highest in more than a year).How can rates be going up when the economy is tanking and the government is throwing everything it can at the banking sector and credit markets? Because bond investors are dumping bonds – and when bond PRICES fall, bond YIELDS (interest rates) rise.Why are

...

Here is the Treasury Bailout plan, with our comments interspersed:

Section 1. Short Title.

This Act may be cited as ____________________.

Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

Comment: This has since been expanded to "any institution doing substantial business in the U.S."  In other words, we could be bailing out just about every major financial institution in the world.

(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:

Comment: Can we say "raw power grab"? We developed a Constitution with checks and balances.

(1) appointing such employees as may be required to carry

...

Article Source Some thoughts about the role played by the GSEs in the run-up in mortgage debt and house prices. Paul Krugman ably lays out the case for why it's conceivable that Fannie and Freddie could have made a contribution: Here's the background: Fannie Mae-- the Federal National Mortgage Association-- was created in the 1930s to facilitate homeownership by buying mortgages from banks, freeing up cash that could be used to make new loans. Fannie and Freddie Mac, which does pretty much the same thing, now finance most of the home loans being made in America. The case against Fannie and Freddie begins with their peculiar status: although they're private companies with stockholders and profits, they're "government-sponsored enterprises" established by federal law, which means that they receive special privileges. The most important of these privileges is implicit: it's the belief of investors that if Fannie and Freddie are threatened with failure, ...