Monday Takeaways: Trump’s $500 Billion IPO Gambit

Shah Gilani|August 11, 2025

President Trump just floated a plan that could raise $500 billion…

He wants to take Fannie Mae and Freddie Mac public – two mortgage giants that have been under government conservatorship since 2008.

The potential IPO could generate $30 billion by selling just 5% to 15% stakes in both companies. But here’s the catch: it could also send mortgage rates soaring for low-income homebuyers.

With 81% of S&P 500 companies beating earnings estimates and speculative fever heating up, is this the perfect time for such a massive market move?

The numbers behind this earnings surge are remarkable:

• 90% of companies have reported Q2 results
• Revenue beats at 81% vs. 70% five-year average
• Three consecutive quarters of double-digit growth
• Communication services, financials, and tech leading the charge

But Trump’s Fannie/Freddie gambit could overshadow even these stellar earnings. The government has controlled these mortgage manufacturers since the 2008 financial crisis, when they lost hundreds of billions on subprime mortgages.

Now Trump wants to free them from conservatorship and let private investors take the wheel again.

I’ll break down what this $500 billion IPO could mean for mortgage rates, why the timing might be perfect given current market euphoria, and how speculative fever is building without quite needing a doctor yet.

Click on the image below to see why this could be the most important IPO decision in decades.

Transcript

Hey, everybody. Shah Gilani here with your Monday Takeaways. First and foremost, it was another good week for stocks last week, and that portends well for the future in my humble opinion. Stocks, as I have been saying since the end of April, after the Trump tariff tantrum, when things started to look like maybe this too shall pass, have been climbing every wall of worry, including those tariff barriers.

So far so good. What’s really been powering last week’s movement and the previous couple of weeks’ movements have been stellar earnings. The takeaway from the earnings picture for Q2 companies that have reported is nothing short of super, I would say. Why?

Here are some facts and numbers, people, because this is what’s really moving stocks. This is what’s causing them to climb every wall of worry. This is what’s causing new highs to be hit day after day almost. First up, these are numbers from FactSet, and they’re fabulous numbers in my opinion.

Last week was a peak week for earnings. About 90% of S&P 500 companies have now reported. So far, we’re seeing double-digit earnings growth for the second quarter 2025. That, if it ends up that way – and it looks like it will – earnings growth should be around maybe close to 12%, about maybe 11.8%, which is excellent and would mark three consecutive quarters in a row of those kinds of really excellent double-digit-plus earnings growth moves.

But according to FactSet, with 90% of companies having reported, 81% who have actually reported have beaten consensus estimates for their earnings. Eighty-one percent. The five-year average of beats is 78%. The 10-year average of stocks that actually beat is 75%.

So 81% is pretty darn good. The average aggregate reporting estimate of earnings beats – actual versus estimate – is 8.4%. So they’re beating analysts’ estimates by 8.4%.

So that’s above the five-year average of 6.9%. Pretty darn good. The largest contributors to earnings growth, you probably figured out: communication services, financials, and information technology. Now as far as revenues go, some people think revenues are more important. I’m in that camp myself.

Eighty-one percent have actually beaten estimates for revenue growth. The five-year average is 70%. So we’re at 81%. The five-year average is 70%. The 10-year average is 64% actually beat estimates for revenues.

Wow. So looking pretty darn good on the revenue side. The average beat is 2.4%. The five-year average is 2.1% and the 10-year average is 1.4% revenue beat over analyst estimates.

Earnings, earnings, earnings. That’s really the picture. But not only that is a positive takeaway. We’re seeing speculative – I would say not quite fever in some places.

Yes, you might consider a fever in terms of meme stocks and certain other speculative plays. But we’re also seeing the government contribute to that because last week, there was talk – and there’s been talk, but it’s gotten more to the surface now – about the government essentially wanting to float in the form of an IPO shares of both Fannie and Freddie. So Fannie Mae and Freddie Mac are two giant housing – really mortgage manufacturers in this business of investments.

In other words, they both buy mortgages from lenders, package them, and sell them to investors. The money that investors pay for those packages of mortgages or mortgage-backed securities goes back into the pools to generate more mortgages.

The deal with packaging them and selling them to investors is they’re guaranteed by the government. They weren’t always guaranteed. There was an implicit guarantee before 2008, but investors took that implicit guarantee as being an actual guarantee and went hog wild, and just bought the securities. At the end of the mortgage run-up, the subprime bubble, when everything exploded and then imploded, Fannie and Freddie lost hundreds of billions of dollars. The government took them over and finally did actually guarantee the mortgages. They had been under conservatorship now since 2008. President Trump wants to basically put them out to the market and say, “Hey, why don’t you all buy shares of these two companies in an IPO that some people say could generate maybe $30 billion?” And that would be the government selling maybe a 5% to 15% stake in both of them.

That could raise potentially – if we’re talking about $30 billion being 5% to 15% – that’s making $500 billion the value of the two companies if they were to IPO. A lot of that money could go back to the taxpayers. There are a lot of unknowns about what would really happen, whether the government would remain the conservator of them or whether they would free Fannie and Freddie to be private and who knows what that would really do to mortgage rates. There’s a lot of contention out there about taking these two companies public and what that would do to mortgage rates, what that would do to especially folks in the low-income range of home buyers. Because if rates rise precipitously for them because perhaps of an IPO and the companies acting more like private companies trying to create greater returns for investors, well, they’re going to have to charge more fees in order to do that, and that would likely raise mortgage rates. So a lot is going on there, but it is speculative in the sense that this government is trying to do stuff to help pay down the debt and also to move stuff along in terms of markets. So that’s a positive. So lots of good stuff going on, and I think it’s going to be another good week for stocks. So far the fever is there.

Things are heated. We haven’t gotten to the point where we need a doctor for the speculative fever, but so far so good. Earnings are really the mother’s milk of investor sentiment. And the sentiment is good because earnings have been really good.

So that’s it for today. Your takeaways are basically all still positive for me. Everything I’m seeing is positive. I haven’t seen anything out there that makes me overly concerned that we’re at the beginning of the end of this bull run, which indeed looks like now it may have another leg to go.

So, hang in there everybody. Keep on trucking. Catch you guys next week. Cheers.