Morning Report: The government prepares to IPO Fannie and Freddie

Vital Statistics:


Last Change
S&P futures 3289 43.25
Oil (WTI) 51.38 1.02
10 year government bond yield 1.59%
30 year fixed rate mortgage 3.63%


Stocks are higher after Chinese markets held up overnight. Bonds and MBS are down.


Construction spending fell 0.2% in November, but was up 5% on a YOY basis. Residential construction was up 1.4% MOM and up 5.8% YOY. Public residential construction was up almost 30% YOY.


Manufacturing performed better than expected in January, with the ISM Manufacturing Index rising to 50.9. This is a sharp rebound from December, which indicates that trade issues are in the rear view mirror.


The government is considering an expansion of the Federal Home Loan Bank’s customer base to include non-bank lenders and mortgage REITs. Federal Home Loan Bank borrowers generally get a sweetheart deal on financing, usually much better than even overnight repo lines. The reason? government subsidies. Note that some mortgage REITs currently do have FHLB lines, but I guess they want more mortgage REITs in the business. The Feds have been frustrated by the large banks, who have shied away from all but the most credit-worthy borrowers.


FHFA has hired an advisor to help recapitalize Fannie Mae and Freddie Mac. Houlihan Lokey won the deal. This will allow Fan and Fred to hire their own advisors for the equity sale. This is part of the government’s plan to decrease its footprint in the mortgage market. The share sale could top $125 billion, which would dwarf the largest IPO ever (Saudi Aramco in December) by a factor of 5. Lots of details remain, but progress is being made.

31 Responses

  1. I’ve long argued that the best decade for rock was the 70’s. Was ‘77 the best year for rock? I’m not sure, but is was a damn good year.


  2. This is pretty entertaining:

    “I Feel Personally Judged by J. Lo’s Body

    Are we really supposed to look this good at 50 now?

    By Jennifer Weiner
    Contributing Opinion Writer
    Feb. 4, 2020

    The answer, I think, is to watch these types of performances like a man.

    Women watch a 15-minute show featuring elite entertainers and, in some cases, end up feeling bad about ourselves.

    Men, meanwhile, watch a three-hour game, played by elite athletes with single-digit body fat, and most won’t feel a single twinge of self-doubt, or miss a single chip from the nacho platter.

    Women see inspiration or goals we’ve failed to attain or a pretty stick to beat ourselves up with. We hear a voice (sponsored by Weight Watchers and Revlon and Planet Fitness and Jenny Craig) whispering This can be yours, if you just work hard enough. Men see entertainment, athletes who exist on a different plane than mere mortals. Their inner voice whispers, Are there any more nachos? I don’t even think it would occur to them to feel bad, or try to emulate what they saw.”


    • The entire Super Bowl and all of the ad campaigns were directed towards building up women.

      and they still complain.


      • Enough is never enough. But I’m kind of glad–it’s an interesting study in how much brand matters. If a brand decides to essentially turn into an emotional abuser of its customer base, how much of their base sticks with them?

        Disney Star Wars and Dr. Who and Star Trek have all followed this model: deconstruct and minimize and sideline all men, build up women but don’t burden them with weaknesses or character arcs. All the other stuff that fans obsess over in canon don’t matter, all that matter is grrrrl power.

        And it’s interesting. There’s been good reviews of Picard. Less for Discovery. Dr. Who has tanked in the ratings but still has an audience. Star Wars Rise of Skywalker left a billion on the table (and 600 million with Solo) post TFA and TLJ . . . but there’s still an audience. Leaving a billion on the table is bad but making over a billion is still . . . good. I think it’s clear that going all in with the whole “women are all that matters” message doesn’t help build the brands, it doesn’t kill them.

        My guess is the brand has to be strong or unique or in demand. Charlie’s Angels, Terminator: Dark Fate and the upcoming Birds of Prey all go full identity politics with an emphasis on “men are bad, women are perfect” and all flopped or, in the case of Birds of Prey, will flop.

        I don’t know how Gillette’s campaign of “you’re an awful human being and an utter piece of garbage that abuses women, buy our razors” campaign went for them at the end of the day. But I’m not buying and Gillette products going forward. And I’m not a big boycotter but when you show such business ignorance and display open contempt for your customers, I’m kind of done when I can buy plenty of other razors.


        • the launch unfunny comediennes into space ad…

          the female football coach (like the dudes are going to do anything more than humor her – please)

          I guess Goodell is petrified of Blue Checkmark Twitter for some inexplicable reason.

          Liked by 1 person

    • Their inner voice whispers, Are there any more nachos? I don’t even think it would occur to them to feel bad, or try to emulate what they saw.

      You can’t read minds. There are guys out there with body-image problems and feel bad because they aren’t at some largely unattainable level, especially guys who weightlift and measure their body fat. Competition kicks in, and they feel bad, just like the ladies.

      However, in that case, as with the author, that describes issues of the person–not the half-time show or the athletic fitness of the footballers.


  3. So much schadenfreude at watching the MSM and the Democrats (to the extent that there’s a difference between them) trying to persuade everyone that the Iowa caucus problems aren’t a conspiracy after three years of doing nothing but hyping election conspiracy theories.


  4. Hilarious:

    Fuller, along with Bachelor Peter Weber, shot their Cosmo cover in a waterfall in Arenal, Costa Rica.

    After the Monday night episode aired, Cosmo announced they were pulling Fuller from the front cover of the magazine because pictures of the bachelor contestant modeling “Marlin Lives Matter” clothing and a logo reading “WLM” or “White Lives Matter” were unearthed over the past week.

    The “WLM” logo does not stand for “White Lives Matter,” or represent the group which was established in response to the “Black Lives Matter” movement. The “White Lives Matter” movement describes itself as “dedicated to the promotion of the white race.” But the “WLM” logo and coinciding “White Lives Matter” slogan Fuller modeled for is a parody label which promotes the conservation of billfish such as the white marlin.

    Yes, you’re reading this correctly. The editors of Cosmo are so woke they pulled Fuller’s cover photo because she wore an off-colored, humorous baseball hat calling for the conservation of fish…

    …“It’s been reported that what she modeled for was actually a Marlin Lives Matter organization focused on preventing white and blue marlin from being overfished, which used ‘white lives matter’ and ‘blue lives matter’ messaging on its promotional shirts and hats. In my view, the nature of the organization is neither here nor there—both phrases and the belief systems they represent are rooted in racism and therefore problematic,” Pels wrote in a letter from the editor published after the episode aired.



    For more than a year, Democrats have been preparing for high turnout in 2020, powered by an electorate juiced by rage against President Donald Trump. But in their first test of the year, early data suggested Tuesday that turnout was “on pace for 2016,” the Iowa Democratic Party said, far below levels many observers predicted.

    In other words: Democrats were counting on Barack Obama-levels of enthusiasm. They got Hillary Clinton numbers, instead.

    I think it’s social media–Facebook, Twitter–and the MSM distorting their perceptions. The general public is not that excited about getting rid of Trump, or picking which of the Democrats goes on to represent the party.

    And it wasn’t just the turnout totals that were worrisome for Democrats. It was the makeup of the electorate.

    Entrance polls showed first-time caucus-goers down this year, to about one-third of all caucus-goers. That fell lower not only than 2008, when nearly 60 percent of caucus-goers were first-time participants, but also 2016.

    If they could do it any year, this would seem to be it. Turnout had surged in the 2018 midterm elections, fueling a strong year for Democrats.

    And the Democrats did nothing but bitch about and impeach Trump. Where are the projects and pork and going through a list of issues important to voters? I feel like this was a lesson that the Republicans learned in ’98 . . . Not everyone voted for them to “get Clinton”. And not everybody appreciated their later singular focus.


  6. Dayum!


    • Well, yes

      The Democrats are the party that says government will make you smarter, taller, richer, and remove the crabgrass on your lawn. The Republicans are the party that says government doesn’t work and then they get elected and prove it.

      P. J. O’Rourke

      Liked by 1 person

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