The Abyss of the Double Dip

8/14/2019 The Abyss of the Double Dip

1/4

Richard Suttmeier is the Chief Market Strategist at www.ValuEngine.com.ValuEngine is a fundamentally-based quant research firm in Princeton, NJ . ValuEngine

covers over 5,000 stocks every day.

A variety of newsletters and portfolios containing Suttmeier's detailed research, stock picks,and commentary can be found HERE.

Suttmeier's Four in Four video and ForexTV Markets Review can be watched on the webHERE.

February 3, 2010 The Abyss of the Double Dip

Some indicators remain in an economic abyss. The Volcker Rule rules. More evidence of a Job-loss recovery! Housing is a buyers market if you can get a mortgage. The urge to walkaway from underwater mor tgages! Tracking the daily charts for the Euro, Gold, Crude Oil andthe Dow.

Certain port ions of the economy and related data remain in the Abyss: CB Consumer Confidenceat 55 is well below the neutral range of 90 to 120. The NAHB Housing Market Index is 16 well belowthe 50 neutral reading. Initial J obless Claims are well above the Recessionary 350,000 milestone.

The FDIC Quarterly Banking Profile shows the banking system shedding assets with many categoriesof consumer and real estate loans rapidly falling into default and foreclosure. At J anuary's pace of 15bank failures, 180 will fail in 2010 with the Deposit Insurance Fund burning through three years ofmember fees.

Volcker Rule rules - I have always been a Paul Volcker fan and he has a chance to make adifference again as President Obamas top economic advisor.

I agree that commercial banks should not be involved with pure proprietary trading, but can trade tocapture its customer flow of business. This is essential to eliminate the mantra of too big to fail.

According to Paul Volcker, "Hedge funds, private equity funds and trading activities unrelated tocustomer needs, unrelated to continuing banking relationships, should stand on their own, without thesubsidies implied by public support for depository institutions."

More Evidence of a Job-loss Recovery - According to the Labor Department the unemploymentrate rose in 306 of 372 metro Main Streets in December. The unemployment rate was above 10% in

138 metro areas up from 125 in November. In the past year unemployment was up in 371 of thesemetro areas.

Housing A Buyers Market, if you can get a mortgage - According to a monthly report from Zillow,buyers paid 2.7% below the list price in December versus 2.6% in November. A year ago the buyer hada 4.5% advantage. As buying power starts to increase again house prices are likely to renew theirdecline, which will force more mortgages underwater and deepen The Great Credit Crunch.

More than five million homeowners wi ll be underwater by 25% or more this year

Banks and mortgage companies are happy to take bailout money thats intended to keep homeownersin their homes, but when the home is valued 75% below the mortgage the trend is to simply walk away.


2/4

Because of the speculative bubble for house prices that began at the turn of the century those whobought in 2005 and 2006 just paid way too much. Then the bubble popped with home values plungingmore than 30% in some cities. President Obamas home modification programs were supposed to helpfour to seven million may have helped about 100,000, and the homes on the cusp that were notrefinanced will become foreclosures and short sales in 2010. This will further depress home pricescontinuing the housing depression. Even homeowners who can afford their mortgages are beingadvised by some mortgage brokers to do a strategic default then rent a similar home for a muchsmaller monthly payment.

The urge to default could spread to 10% of all homeowners in 2010 after being frustrated by the lack ofhelp from their bankers, the near impossible mortgage modifications programs and tougher lendingstandards by the FHA, Fannie Mae and Freddie Mac. If the $700 billion TARP was allocated to helphomeowners on Main Street instead of the Fat Cats on Wall Street and global investors, the USeconomy would likely be better off today. The term used against this idea in 2007 was called moral

hazard. Now many who said that are walking away from their homes.

The euro, gold and crude oil and the Dow are alleviating oversold condi tions on their dailycharts.

The euro is oversold with weekly support at 1.3658 and quarterly resistance at 1.4327.

Chart Courtesy of Thomson / Reuters

Comex gold has rising MOJ O with my quarterly pivot at $1084.9, a monthly pivot at $1093.5, my annuapivot at $1115.2 and semiannual resistance at 1139.7.


3/4

Nymex crude oil has rising MOJ O with my weekly pivot at $75.87, my annual pivot at $77.05 andmonthly resistance at $79.90.


The daily chart for the Dow has rising MOJO with daily support at 10,003 with weekly and annual

resistances are 10,341 and 10,379. The 21-day and 50-day simple moving averages are set for anegative cross-over at 10,449 and 10,433 as the new market ceiling.



4/4

Send me your comments and questions to [email protected]. For more information on ourproducts and services visit www.ValuEngine.com

Thats todays Four in Four. Have a great day.

Check out the latest Main Street versus Wall Street on Forex TV Live each day at1:30 PM.

http: //www.forextv.com/Forex/custom/LiveVideo/Player.jsp

Richard SuttmeierChief Market Strategistwww.ValuEngine.com(800) 381-5576

As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.com. Ihave daily, weekly, monthly, and quarterly newsletters available that track a variety of equity and other data parameters aswell as my most up-to-date analysis of world markets. My newest products include a weekly ETF newsletter as well as theValuTrader Model Portfolio newsletter. I hope that you will go towww.ValuEngine.com and review some of the sampleissues of my research.

I Hold No Positions in the Stocks I Cover.

Documents

The Abyss of the Double Dip