Fannie Mae lost a mere $23.9 bln in Q1. They see a further decline of 7-12% in US home prices in 2009 and see no return to profitability in the foresseable future. Uncle Sam will have to absorb those losses.
No worries for the reflation trade though. The green shoots are overwhelming the weeds. Banks are selling stock left and right and having no trouble placing it today, giving the market a great deal of renewed confidence.
EUR/USD is approaching trendline resistance at 1.3522, now at 1.3513.