Four In Four Report

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 can be watched on the web HERE.

September 22, 2009 – The Great Credit Crunch – Prepare for More Problems Problems in the Banking System, Strong Banking Oversight Won’t Work, the Job Loss Recovery, and the FHA Needs Money Too Problems for the Banking System Begin with Ending the Mantra of “Too Big To Fail” Our banking regulators want to end “too big to fail” but that will be difficult as the FDIC seeks help to handle 500 to 800 bank failures by the end of 2011. FDIC Char Sheila Bair says, “To end too big to fail, we need an orderly and highly credible mechanism that's akin to the process we use to resolve FDIC-insured banks. When the FDIC closes a bank, what typically happens is shareholders are wiped out ... creditors take a substantial haircut, management is replaced, and the remaining assets of the failed institution are sold off.” This is all well and good, but financial giants have assets that are so large and complex, who will buy them? We do not need a Super Banking Regulator. We need Regulators who know how to do their jobs A strong oversight council won’t work because things in the banking system are too big to explain. After all the Federal Reserve has still not told the public the valuations put on the Bear Stearns collateral. The TARP was supposed to establish a market for toxic assets, but one year later, where is that market? With toxic assets pushed off bank balance sheets, where is the transparency? How do banks account for the $205 trillion in notional amount of derivative contracts? What are the break downs, and how can we assume that contra-party problems won’t surface again? How did our financial system function years ago when we could not spell “derivative”? Derivative amounts keep rising quarter over quarter and year over year! The banking system is being held up by cheap money, but this money results in huge salaries and bonuses on Wall Street, but is not filtering to Main Street where it’s needed to help small business, consumers and homeowners. If the US Treasury, Federal Reserve and FDIC did not see “The Great Credit Crunch” coming

how can any Super Regulator do so? The Job Loss Recovery According to the Bureau of Labor Statistics just 16 states saw their unemployment rates fall in August versus July. In all other states joblessness is either stagnant or getting worse. The economic recovery will be anemic with hours worked at a record low. Even the improving ISM surveys, these surveys are showing deterioration in the jobs categories. The Labor Department reports that 42 states lost jobs last month up from 29 in July with the biggest cuts in Texas, Michigan, Georgia and Ohio. Since the end of 2007 the economy has lost 6.9 million jobs and there are 9.1 million part-time workers seeking full time employment. There is no evidence that President Obama’s economic program is saving or creating jobs. The Federal Housing Administration Needs Cash Too The FHA is running on empty when it comes to its financial reserves, which have fallen below mandatory levels for the first time in its 75-year history. The problem is that 17% of FHA borrowers have missed at least on mortgage payment or are in foreclosure. This will make it tougher for home buyers who need the FHA guarantee to finance a home purchase. The tightening of FHA standards is yet another stumbling block for the housing market. Send me your comments and questions to [email protected]. For more information on our products and services visit www.ValuEngine.com That’s today’s Four in Four. Have a great day. Richard Suttmeier Chief Market Strategist ValuEngine.com (800) 381-5576 As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.com. I have daily, weekly, monthly, and quarterly newsletters available that track a variety of equity and other data parameters as well as my most up-to-date analysis of world markets. My newest products include a weekly ETF newsletter as well as the ValuTrader Model Portfolio newsletter. I hope that you will go to www.ValuEngine.com and review some of the sample issues of my research.

“I Hold No Positions in the Stocks I Cover.”