Monday, July 14, 2008

Working Weekend - Fannie & Freddie, InBev, Short Sellers Beware

Whoa... What a Sunday!!??!!

First, Fannie Mae (FNM) and Freddie Mac (FRE) are going to get aid from the U.S. Government in a big way. The Bush administration is going to ask for Congressional authorization to buy stock in the two mortgage industry giants and increase the government's credit line. This will strengthen the companies and stabilize the stock price. Then, the Fed is allowing both companies to access the discount window. Finally, Secretary of the Treasury Paulson is going to ask that Congress allow the Fed to essentially be a consultant in matters of "capital standards" of the two companies.

Second, American giant Anheuser-Busch (AB) has agreed to be purchased by InBev (a Belgium-Brazilian Company) for $49.91 billion to create the world's largest brewer. The $70 per share stock price was greeted much more eagerly than the previous $65 per share price. InBev has promised to make St. Louis its basis of North American operations, and InBev would keep many of the current icons and brands. In fact, Budweiser will become its flagship global brand.

Finally, a brief release from the SEC - The U.S. Securities and Exchange Commission said Sunday that it and other regulators are starting to look into new examinations to prevent stock-price manipulation by short sellers and others. The agencies' goal is the "prevention of the intentional spread of false information intended to manipulate securities prices."

So much for a slow weekend...

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