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

[orthopa]

Plus Warner's silence.

Plus the Warner, Crapo, Mnuchin dinner Wednesday night.

Plus the Maxine panic letter 11pm last night.

 

Plus Mnuchin's planted question with Timmons-SC designed to clarify the trigger point for release during the capital build.  IMO, Mnuchin is unlikely to make this type of effort if he wasn't serious about a PSPA amendment/consent decree.

 

Overall, I looked for any sign of a change in direction away from the objectives written out in the UST Housing Reform plan.  I didn't see any, and new signals (from Powell/Crapo/Warner) left me feeling even more positive.  Mnuchin appears to be a man of his word who works in an administration that prides itself on keeping promises. 

 

Like it or not that's a wager we are all making.

 

agree how can you have a plan for releasing on a consent decree if you don't do a final agreement? IMO he just showed his cards/purposely telegraphed etc.

[undervalued]

Plus Warner's silence.

Plus the Warner, Crapo, Mnuchin dinner Wednesday night.

Plus the Maxine panic letter 11pm last night.

 

Plus Mnuchin's planted question with Timmons-SC designed to clarify the trigger point for release during the capital build.  IMO, Mnuchin is unlikely to make this type of effort if he wasn't serious about a PSPA amendment/consent decree.

 

Overall, I looked for any sign of a change in direction away from the objectives written out in the UST Housing Reform plan.  I didn't see any, and new signals (from Powell/Crapo/Warner) left me feeling even more positive.  Mnuchin appears to be a man of his word who works in an administration that prides itself on keeping promises. 

 

Like it or not that's a wager we are all making.

 

agree how can you have a plan for releasing on a consent decree if you don't do a final agreement? IMO he just showed his cards/purposely telegraphed etc.

 

I am just trying to poke holes to the thesis. At this point, the ball is on Mnuchin's court right? He has complete control over which direction GSE goes whether we get any court win or not. If he left without doing anything about GSEs, is that similar to sticking up middle finger to everyone who's betting on this?

[Luke 532]

"What time is Scotus hearing on Wednesday? The Finale "

 

"11:00PM Singapore Time (SGT)"

[COBFInfinity]

As I delineated before in another post if Trump loses and the SCOTUS is argued then at a minimum I would heavily decrease my position...

 

The problem with that idea is that Mr. Market will probably reduce your position for you before you get a chance.

 

Interesting where we're at now. Maybe I should wait 24 hours to post this, but it seems pretty darn likely that SCOTUS argument will occur on the 9th. And my hunch was wrong - preferred prices are higher than they were in late October even without the pre-SCOTUS settlement we've been hoping for. Just shows again that predicting price movements doesn't work very well.

 

Orthopa, however, is on the record saying he/she would heavily decrease exposure if SCOTUS is argued. Are you sticking with that view?

[investorG]

Plus Warner's silence.

Plus the Warner, Crapo, Mnuchin dinner Wednesday night.

Plus the Maxine panic letter 11pm last night.

 

Plus Mnuchin's planted question with Timmons-SC designed to clarify the trigger point for release during the capital build.  IMO, Mnuchin is unlikely to make this type of effort if he wasn't serious about a PSPA amendment/consent decree.

 

Overall, I looked for any sign of a change in direction away from the objectives written out in the UST Housing Reform plan.  I didn't see any, and new signals (from Powell/Crapo/Warner) left me feeling even more positive.  Mnuchin appears to be a man of his word who works in an administration that prides itself on keeping promises. 

 

Like it or not that's a wager we are all making.

 

agree how can you have a plan for releasing on a consent decree if you don't do a final agreement? IMO he just showed his cards/purposely telegraphed etc.

 

I am just trying to poke holes to the thesis. At this point, the ball is on Mnuchin's court right? He has complete control over which direction GSE goes whether we get any court win or not. If he left without doing anything about GSEs, is that similar to sticking up middle finger to everyone who's betting on this?

 

With no 4th amendment correcting the NWS, Mnuchin (Trump) has been flipping us off for 23 straight months (post-watt).

[Guest cherzeca]

I got the incentives all wrong. I thought T/fhfa would understand that if you are going to do 4thA/settle you do it before scotus argument. question of respect for scotus. turns out that T/fhfa could give a damn about anything else than their precious ego-centric selves.

[WB_fan82]

The only rationale for Treasury to settle was to inject capital back into the GSEs.  That only made sense as part of a grand recap plan, which didn't happen.

 

Nothing said on Dec 9th will change this.  There will be no settlement.  If capital comes back from the Treasury via overage over time, great.  Let the courts work it out.  Zero upside for TSY to do this and zero rush to get that $125B of capital back to the GSEs.

 

But even if I'm wrong, there would be no settlement until the optical cost is zero.  That doesn't happen until after the GA Senate elections.

[Luke 532]

WSJ eddy board says releasing Fannie and Freddie under a consent order during the lame-duck period between administrations is the “least bad” option.

[Luke 532]

Mnuchin voluntarily mentions consent order without being prompted at last week's hearing, now WSJ is saying it's the "least bad" (i.e. best) option.  Juuuuuust a coincidence. Riiiight :)

 

WSJ eddy board says releasing Fannie and Freddie under a consent order during the lame-duck period between administrations is the “least bad” option.

[WB_fan82]

How the hell does WJS ed board say the government hasn't been paid back?

 

I'm flabbergasted how idiotic and factually false that is.  The government has gotten back the 10% coupons in cash, plus the entire principal, plus extra.

 

Very disappointing.

[COBFInfinity]

How the hell does WJS ed board say the government hasn't been paid back?

 

I'm flabbergasted how idiotic and factually false that is.  The government has gotten back the 10% coupons in cash, plus the entire principal, plus extra.

 

Very disappointing.

 

John Carney (no longer at WSJ, but matched their overall views throughout) is still on Twitter today saying that he thinks the NWS was legal. A lot of them bought into the ridiculous logic of Lamberth that the only thing that mattered in HERA was the use of the words may vs. shall, and they're sticking with it. Geez, every company should just start sticking vague words into their prospectuses and then screw investors later if it's that easy.

[SnarkyPuppy]

Does anyone have info on listening/watching the hearing today?  I saw somewhere that the video is being shown at 9:45pm EST on CSPAN

[orthopa]

As I delineated before in another post if Trump loses and the SCOTUS is argued then at a minimum I would heavily decrease my position...

 

The problem with that idea is that Mr. Market will probably reduce your position for you before you get a chance.

 

Interesting where we're at now. Maybe I should wait 24 hours to post this, but it seems pretty darn likely that SCOTUS argument will occur on the 9th. And my hunch was wrong - preferred prices are higher than they were in late October even without the pre-SCOTUS settlement we've been hoping for. Just shows again that predicting price movements doesn't work very well.

 

Orthopa, however, is on the record saying he/she would heavily decrease exposure if SCOTUS is argued. Are you sticking with that view?

 

I haven't as you mention anything settlement wise could have come down to the wire. Here at 9 am EST its unlikely that will happen. I too was wrong in my line of thinking that a settlement HAD to be done. I would shift my goal posts now to the 4th amendment being done before Jan21st as the point of no return with a huge position. Its seems mnuchin et al is comfortable to go forward with this regardless of what the SCOTUS decides. Im still at a bit of a loss how FnF starts to raise money and when if the SCOTUS decides the NWS was legal.

 

1. Are you able to raise capital in these companies knowing the NWS was legal?

 

2. Whats the soonest you can go to market now to raise capital? One would think it has to be after the SCOTUS decides in late spring/early summer.

 

 

[Luke 532]

Does anyone have info on listening/watching the hearing today?  I saw somewhere that the video is being shown at 9:45pm EST on CSPAN

 

Here's the link... https://www.c-span.org/video/?477438-1/collins-v-mnuchin-consolidated-oral-argument

[Guest cherzeca]

How the hell does WJS ed board say the government hasn't been paid back?

 

I'm flabbergasted how idiotic and factually false that is.  The government has gotten back the 10% coupons in cash, plus the entire principal, plus extra.

 

Very disappointing.

 

John Carney (no longer at WSJ, but matched their overall views throughout) is still on Twitter today saying that he thinks the NWS was legal. A lot of them bought into the ridiculous logic of Lamberth that the only thing that mattered in HERA was the use of the words may vs. shall, and they're sticking with it. Geez, every company should just start sticking vague words into their prospectuses and then screw investors later if it's that easy.

 

the good thing about telling carney he is an idiot is that he blocked me on twitter.  being blocked has its advantages.

[Guest cherzeca]

"1. Are you able to raise capital in these companies knowing the NWS was legal?"

 

this would be a hurdle. they would have to be released first, so that C powers (that made NWS legal) would evaporate, but the precedent would be chilling for investors

[SnarkyPuppy]

Umm... is it supposed to be going this well...

[typicalvalue]

Listening to the SCOTUS arguments. It's funny how we have overestimated settlement odds prior SCOTUS. If we look back in October we all agreed that the worst outcome was a Biden victory and no settlement pre-SCOTUS oral arguments. Yet pfds have appreciated due to capital rule and PSPA hopes. Investing is hard.

[orthopa]

Umm... is it supposed to be going this well...

 

Thats my thought too. They are fileting the SG back to back to back here. My goodness.

[typicalvalue]

Umm... is it supposed to be going this well...

 

Thats my thought too. They are fileting the SG back to back to back here. My goodness.

 

The justices are far more hostile to Tsy than I was expecting, it's going to be a long day for the government.

[Luke 532]

Listening to the SCOTUS arguments. It's funny how we have overestimated settlement odds prior SCOTUS. If we look back in October we all agreed that the worst outcome was a Biden victory and no settlement pre-SCOTUS oral arguments. Yet pfds have appreciated due to capital rule and PSPA hopes. Investing is hard.

 

Agreed.  That's why buying at such a discount to par is a beautiful thing... can be wrong and still have your share price increase.

[Luke 532]

Umm... is it supposed to be going this well...

 

Thats my thought too. They are fileting the SG back to back to back here. My goodness.

 

The justices are far more hostile to Tsy than I was expecting, it's going to be a long day for the government.

 

Yes, but they're grilling David Thompson, too.  Anybody's guess as to how they'll rule.

[typicalvalue]

Umm... is it supposed to be going this well...

 

Thats my thought too. They are fileting the SG back to back to back here. My goodness.

 

The justices are far more hostile to Tsy than I was expecting, it's going to be a long day for the government.

 

Yes, but they're grilling David Thompson, too.  Anybody's guess as to how they'll rule.

 

yeah, waiting for @cherzeca post SCOTUS analysis

[Guest cherzeca]

my initial reaction to the SCOTUS Collins oral argument was that it was about as favorable to Ps as could be expected from a SCOTUS oral argument…understanding that gleaning a decision outcome from oral argument can be fraught with disappointment.

 

I was surprised that more than one justice posed the hypo as to what should we do if we find the acting director who signed the NWS was removable at will. I think that is a weak argument, but since it was argued by both the DOJ and the amicus it had to be explored. however, justices often pose a hypothetical inquiry so as to think through what are the ramifications of going down that rabbit hole, and I cant say that I found that by posing that hypo there was any particular enthusiasm expressed for the merits of the claim that the acting D was in fact removable at will.

 

one justice mentioned that it was a big stakes case, and in that context I think the examination of the acting D hypo was more an inquiry into whether the remedy can be narrowed than can the NWS be upheld in toto.  I dont recall a lot of discussion of the actual merits of the claim that the acting D was removable at will.  Thompson argued against it on the merits and wasn't pushed back that much on the merits, though he was pushed to consider the consequences if they ruled the acting D was removable at will.

 

I dont know that this hearing would put Mnuchin confidently over the edge if he is looking for a gentle push, but I dont think this was a hearing that would argue for Treasury to reconsider any decision to proceed with a 4thA etc prior to 1/20/21, if that is in fact where it is heading.

 

remember as a big stakes case, one may have thought (and I feared) that scotus would seem inclined to favor the govt on the merits, and I certainly didnt see that

 

Thompson's opening and closing were both APA claim centric, while scotus spent all of its time on the constitutional claim. of course, scotus prefers to analyze constitutional claims more than statutory claims when both are presented.

 

let me put it this way: if scotus ws going to push back on Thompson on anything, I would prefer it would be on the implications of finding the acting D was removable at will than on really any other merits point.

 

[Guest cherzeca]

now let me be a bit speculative. you will notice that SCOTUS spent very little time on the merits of the APA claim that the NWS is ultra vires, much more time on the constitutional claim. in his opening the assistant SG mentioned the anti-injuction clause and that the APA itself doesn’t support the APA cause of action, which implicates the APA claim, but there wasn’t much follow up by the justices on the APA claim (and indeed, those provisions implicate the constitutional claim as well). now why would there be so much more focus on the constitutional claim than the APA claim? one answer might be that the justices think the constitutional claim will decide the case. Now if the justices thought the NWS would be validated, either in part because the acting fhfa D was removable for cause, or in whole because the Seila holding doesn’t apply to Collins, then you would think the justices would have spent much more time on the APA claim than it did. now, one may think that the APA claim is so powerful for Ps that no time needed to be spent on the APA claim, but I think that if there was any possibility that the constitutional claim wouldn’t be fully upheld then the APA claim would have garnered more focus.