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 23, 2009 – The Bull in a China Shop Today’s FOMC Statement, the FDIC’s Witches Brew, the Bull in a China Shop, and Geithner’s Little White Lie The FOMC Statement will show that not much has changed since August 12th. The Fed will still recognize that growth remains constrained by ongoing job losses, sluggish income growth, and tight credit. Businesses are still cutting back as evidenced in the rise is empty office space. The Committee will still indicate that policy actions in place will gradually contribute to a resumption of sustainable economic growth in a contest of price stability. The drags on this scenario are found in the growing categories of bad loans in the FDIC Quarterly Banking Profile, and with the lack of job growth with hours worked stuck at a record low. The FOMC will leave the federal funds rate at zero to 0.25%, which to me questions the Fed’s confidence, and leads to the re-inflation of asset bubbles on the weak dollar carry trade. The quantitative easing in place will be allowed to sunset as 2009 draws to a close. The Fed will purchase up to $1.25 trillion of mortgage-backed securities and $200 billion of Fannie and Freddie debt. So far the tally is $862 billion of MBS and $125 billion of agency debt. The purchase of US Treasuries will total $300 billion when this program ends at the end of October. If the Fed adds to or extends these programs it would be another sign that they lack confidence that their policy is working. The FDIC Witches Brew to Replenish the Deposit Insurance Fund The Deposit Insurance Fund is in arrears by approximately $3.7 billion dollars on the closure of 49 banks so far in the third quarter. With more than 3,000 banks overexposed to Commercial Real Estate Loans, 37.5% of all banks are unhealthy. The FDIC won’t tell us the names of their 416 Problem Banks. With FDIC Chair Sheila Bair panning the “too big to fail” concept, would someone name the healthy banks that could be asked to loan the FDIC money. All the bigger banks have toxic

loans off balance sheet. Banks know the underlying problems and for so-called healthy banks to bail out risky banks, will only dilute the problems in the banking system. With 500 to 800 banks headed for failure, the FDIC should swallow its pride and borrow from the US Treasury, which they will eventually have to do anyway. Bankers are worried about two more assessments that the FDIC has authority to do and these will total just $10 billion, which will not be enough to get through the tsunami of bank failures to come anyway. Borrowing from the US Treasury is another bailout, but it’s a worthy one that protects taxpayer deposits of up the $250,000 in each and every bank. The Deposit Insurance Fund dipped below regulatory guidelines in June 2008, and it has five years to get back to standards. It will take taxpayer money to allow this to happen. It’s the nature of “The Great Credit Crunch” continuing through 2011. The weekly Chart for the Dow reflects the Bull in the China Shop given overbought readings. The Bull in the weekly chart for the Dow has become extremely overbought with a MOJO reading of 9.3 on a scale of zero to 100. My annual pivot is 9,750 with annual resistance at 10,012. The Bull has entered the China shop and we will soon find out what’s broken including China. Treasury Secretary Geithner said that it’s the first time the US economy has seen growth in eighteen months. Let’s look – Was Q2 2008 eighteen months ago – I don’t think so. Wouldn’t it be refreshing if our Banking Regulators told us the truth? 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.

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