Echo To All

Why This Rally Is Unsustainable

Naufal,

ur over thinking urself here. This rally was not caused by quants or technials. There were very real economic factors that indicated and continue to lead to, stabilization. The market acted accordingly.

The economic footing will prevent a retest of the lows, the low valuations will simply not be justified.

(quant trading facilitates or exaggerates movements, it does not create a sustained market rally as we recently had)

Credit Card Defaults Are Just Beginning

simmer down on the credit card defaults... everyone keeps mentioning it, but credit card debt is known to be expremely risky and defaults see a big increase during times of economic downturns.

in other words, there will be no surprises with respect to risk here... this type of debt is far better understood by the banks.

Credit Cards: The Next Subprime?

come on Grace... everyone working on the street knows debt from credit cards are higher risk, and understand that risk far better than they did subprime debt. Meaning, they will be taking these delinquencies into account.

not that I even have to spell it out for you (as i am sure u already know), but the difference between credit card debt and subprime debt is that a grossly incorrect assumption to risk was placed on subprime.

investors know very well in times of economic slowdown credit cards delinquencies go up. (especially when the consumer is squeezed with a higher cost of basic goods.)

so no... its not the next subprime, its just the normal increase in delinquencies from an economic slow down. Pending how severe the slow down and real inflation (not gov. reported inflation) stays high, prudent assumptions should be the delinquency rate goes higher.