Midday Commentary: Market stays firm; Fannie, Freddie report huge earnings, but trading stalls

By Stephanie N. Rotondo

Phoenix, Nov. 7 - Preferred stocks were again gaining on Thursday.

The Wells Fargo Hybrid and Preferred Securities index was up 10 basis points as of midday.

Still, a trader said it was on the quiet side, even in Fannie Mae and Freddie Mac, both of which reported earnings early in the session. However, the subdued trading in the agencies' preferreds was not for lack of trying; the trader said that the Pink Sheets exchange - on which Fannie and Freddie trade - was down.

But, with Fannie reporting net income of $8.7 billion and Freddie reporting income of $30.5 billion, the trader speculated that the preferred would pop once the exchange reopened.

For its part, Freddie's huge profit was due to writing up almost $24 billion in tax-related assets.

The massive profits at both agencies meantime also signaled that taxpayers were ever closer to getting their money back after bailing out the firms in 2008.

Freddie is planning to make a $30.4 billion payment in December, which will be an overpayment of about $9 billion. Fannie is making an $8.6 billion payment, which will leave it with about $2.2 billion to pay back to taxpayers.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.