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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Sam Sara who wrote (54078)1/4/2001 1:12:19 PM
From: patron_anejo_por_favor  Read Replies (1) of 436258
 
<<I am puzzled by weakness of FNM and FRE here>>

2 things:

1) FNM/FRE were considered (wrongly, IMO) "defensive" plays and therefore relatively attractive during a slowdown. Therefore Fed Funds cuts render them less attractive than other financials, especially banks

2) There is a deep suspicion among many that due to their astronomical leverage, FNM or FRE may be in trouble with the speed of the current slowdown. BubbleBoy's panicky rate cut yesterday only reinforces that opinion (ie, that someone needed help...FAST!) and that revelation was news to many of the Baghol...ERRR, SHAREholders of FNM who thought they were getting a steady dependable play. The strange press release that Tippet posted affirming the adequacy of FNM's asset reserves further supports this theory.
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