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To: mishedlo who wrote (8381)	1/3/2001 11:53:54 AM
From: mishedlo	Respond to of 13572

HAND appears (to me anyway) to be in some sort of short squeeze rally. Otherwise that rally is totally absurd since my feelings on hand are roughly equivalant to my favorite cash cow RIMM. We need to watch this one for an entry point on any stall. Was there some "news" perhaps, to account for this absurdity? M

To: mishedlo who wrote (8381)	1/3/2001 12:16:01 PM
From: mishedlo	Read Replies (4) \| Respond to of 13572

From Mike Burke in response to 2 questions 1) The case against Fanny Mae 2) Why the huge JAN open interest in calls (I can not remember whether it was FNM or FRE) Mike, Here's the case against Fannie and Freddie: 1. Housing starts are turning down and housing sales growth is how they make their money. 2. They rely on their govt. "moral obligation" to keep the rates at which they borrow low. These moral obligations are not likely to be as strong in a recessionary environment. 3. The govt. may have to return to the credit market this year if GDP growth, and tax collections with it, cools off. Any competition from "full faith and credit" makes "moral obligation" look less enticing to bond buyers. 4. Their assets are leveraged incredibly and even a slight tick down can wipe out their eps, or at least destroy their growth rates. 5. They are favorite political whipping boys and nobody really likes them. In Washington, they are regarded as necessary evils. 6. They are at or near all time highs. 7. I am waiting for Freshmen Congressmen to start asking questions about their "obscene profits." I have no way of knowing what the long calls represent. However, if I were a major institution shorting the stock, I might buy an out of the money leap to hedge myself. Also, if I were shorting $70 calls, I might buy and out of the money to cap any possible loss on that credit spread. And, in fact, I did just that, though all those outstanding calls are not me. In the old days, maybe, but not any more. <g> A followup post in response to a refinance question and/or banks selling their loans to get rid of them. I am wondering why the banks are getting rid of mortgages (fear of defaults) I really do not know if this is how it works so I am speculating here. Mike, But how leveraged do the already overly-leveraged Freddie and Fannie have to get to take on all those new obligations? They are already supporting dollars in obligations with pennies in assets.