Where the Rot IS

Fannie Mae (FNM) just reported earnings and to say the least, they were terrible. 2.57 loss per share for the quarter, and the need to raise another 6 billion in capital. Expectations were for a .81 loss-the spin from the media will be interesting. More important, they state in the release that 2009 credit losses will be higher than 2008 losses. Hello Alt-a and Prime and ARM resets. Dividend to be cut. Once again the US taxpayer is going to get the short end of the stick while the Wall Cheat Fat Cats keep their ill gotten gains.
UBS just annoubnced another massive qtrly loss-10.9 bln, cutting 5500 jobs. The rot continues. The one bright spot is that they managed to sell 21 billion of subprime and Alt-a mtgs to Blackrock for 15 billion. So at least we know a reasonable valuation for some of these assets. Lazard reports a loss as does Legg mason. The bottom for financials is not in, it will be in when housing prices stop going lower or when US workers wages rise to a level to afford a house.
Speaking a covering their assets, SP had an announcement on Friday stating the expected recovery rates for the various tranches of CDOs. Even the highest rated tranches of the CDOs are expected to return 60-70% of the principle amount. That means the majority of the lower rated tranches are worth 0. There is more pain in financial land to come. Deleveraging and hedge fund blow ups will be commonplace.

Oil testing 120 and all the commentators are busy top calling. Nobody seems to believe the move. Even myself consider oil to be ahead of itself, but I am not short, but reduced long. If oil stays above 105 for the 2nd qtr, oil company profits are going to be ridiculously large.
Gold holding above 850, but it seems to lack any buying power-more likely short covering. It is dead money for a qtr or two.

CNBCs Steve Liesman is part of the hedge fund crew. Very opinionated-not reporting the news, but interpreting the news and part of the happy go lucky crowd. Lies Man is appropriate.