Hussman: Expect Second Round of Credit Woes

Excerpt from the Hussman Funds' Weekly Market Comment (6/16/08):

That fallout from the housing bubble is just beginning to hit its stride in terms of mortgage delinquencies and foreclosures. As I noted in my April 14 comment (Which Inning of the Mortgage Crisis Are We In?), since the progression of foreclosures has mirrored the pattern of adjustable mortgage rate resets, mid-2008 will most likely represent the highest rate of change in cumulative foreclosures, after which they will continue to rise but at a moderating rate.

In short, mortgage foreclosures and defaults are just now hitting their stride, and we are likely to observe a second round of credit fears as those losses mount. The U.S. dollar has enjoyed a brief rebound on tightening talk from the Fed, which is likely to quickly dissipate as soon as those credit concerns revive. Meanwhile, commodity price pressure is likely to diminish by the end of summer as the result of a continuing economic downturn coupled with a flight-to-safety which will reduce monetary velocity.

Comments

[floorboard:]

Very helpful.

2008 Jul 13 03:58 PM