Federal National Mortgage Association (OTC:FNMA) Signals Growth With a Hint of Caution
Northern, WI 04/18/2013 (GDPInsider) – Federal National Mortgage Association (OTC:FNMA) in a release that is sure to cause some disquiet in the market, suggested that economic growth recorded in Q1 2013 may turn out to be unsustainable.
The 3.2% jump is being attributed to build up in business inventories but the government-sponsored enterprise insists that growth for 2013 is tipped to rise no greater than 2.3%, which by any standard is pretty modest given the 1.7% economic growth recorded for the whole of 2012.
Jobs may not be the catalyst
The jobs report for March 2013 wasn’t as upbeat as many had hoped and Fannie was keen to point out that this sector may not be the catalysts for any gains to be made over the coming months. Instead Fannie sees the upward trend of rising house prices as the likely stimulus for predicted growth. This is good news for those in the markets who predicted that the housing recovery may be well off into the future.
Fannie cites increased investments in residential properties as the key indicator for where things are going and highlights the fact that for seven consecutive quarters residential investments have being either positive or neutral contributors to economic growth.
The flies in the ointment
Every positive prediction of course has its warnings and Fannie has highlighted the potential hurdles that the economy may face for 2013 and beyond. Fannie cites “tax hikes, sequestration, and the euro-zone crisis” as possible threats to sustained growth in the coming months. Still, Chief Economist at Fannie, Doug Duncan, believes that the aforementioned strong uptick in the housing market may be enough to stave off any fiscal troubles.
Fannie’s own presence in the markets weren’t helped by its release. At the start of trading today the stock opened up at $0.81, down 44.90% on the company’s 52-week high of $1.47. But much like the economic forecast data, Fannie is showing some signs of life because the company is trading 32.79% above its 50-day moving average of $0.59.
All in all the positive prediction for economic growth looks set to feed into market optimism and Fannie’s own fortune will no doubt benefit from these outcomes.