Free Trend Analysis | Monday 13 July 2009
“Unemployment is likely to rise to 13% or higher and will weigh on the economy for several years, countering government efforts to stabilize the banking industry. We underestimate how much the whole economy is dependent on the mortgage industry. This is what happens when you delay the inevitable. We’re buying time here, but we’re not restructuring the economy,” said analyst Meredith Whitney to CNBC.
* High Loan-to-Value + Trigger Event (Unemployment) = Default: “With the decline of recent weeks, the market has cleared away the short-term overbought condition it established in June. The percentage of stocks above their respective 50-day averages, for example, has retreated from a disturbingly high 92% to a slightly but not profoundly oversold level of 32% here. Investors have predictably been staring at the “green shoots” and have noticed a conspicuous absence of root formations so far. From our standpoint, the next several weeks look as if they may be critical in either offering evidence that something deeper is taking hold, or pulling those shoots up as weeds,” reports Hussman.
For a FREE tour of Market Club including a Trend Analysis of your favorite stock try the RISK FREE 30 day trial here!
* CIT in talks to secure liquidity: “Lender reportedly says its collapse could bring down 760 manufacturers and precipitate a crisis for up to 300,000 retailers. CIT officials were scrambling to improve the group’s funding position amid fears that nervous customers could start withdrawing their funds and as Treasury Secretary Geithner said he’s closely following the saga,” reports Marketwatch.
* Japan Should Diversify Reserves: “Japan should consider shifting its $1 trillion of foreign reserves away from the dollar and buying International Monetary Fund bonds,” said Masaharu Nakagawa, head of the nation’s opposition party, leading in polls ahead of next month’s election, reports Bloomberg.
* Europe digs its economic grave while the ECB answers to no one: “Without a radical change of strategy, the ECB risks pushing the weakest states into a debt-compound spiral that can only end in bond crises and/or the disintegration of Europe’s monetary union – whichever comes first. ECB experts think eurozone banks will have to write down a further €203bn by the end of next year. Yet ECB policy-makers seem unwilling to face the implications,” reports Telegraph.
* “Should we be surprised when the U.S. Senate blocked a bill last week to audit the Federal Reserve? Tis true! Rep. Ron Paul and more than half of the House cosponsored the Federal Reserve Transparency Act, HR 1207, which they hope to have hearings on soon. On the Senate side, however, Sens. Jim DeMint, Mike Crapo and David Vitter cosponsored S 604, companion legislation introduced by Bernie Sanders. But it was stopped cold before even being introduced on the floor on “procedural grounds,” reports WND.
* “Republicans called Obama’s $787 billion spending plan a ‘flop’ and said it hasn’t fulfilled its hype. Republicans lined up in opposition to a second economic stimulus package in a rare demonstration of unity from an out-of-power political party in search of a rallying cry against President Barack Obama. They criticized the White House for increasing the federal deficit and doing little to combat an unemployment rate that hit 9.5 percent in June. ‘The reality is it hasn’t helped yet,’ said Sen. Jon Kyl, R-Ariz,” reports AP.
