A theory of Fed announcements

If you've been paying attention, the Fed likes to release bad news
after the markets close on Friday afternoon. The past couple weeks,
they've announced the failures of small regional banks.

Well today [referring to a Friday], they announced something just a little bit bigger – the government bailout/takeover of Fannie Mae and Freddie Mac,
the two large mortgage finance guarantors. The markets have been
expecting this for a while, but obviously not everyone was expecting it
as their stock prices were $5.50 and $4 respectively when the market
closed today. If everyone was expecting this, then those prices would
have been a lot closer to zero.

Here is more.


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