Seeking Alpha

Richard Suttmeier's  Instablog

Richard Suttmeier
Send Message
ValuEngine.com ValuEngine, Inc is an independent research company, producing recommendations, forecasted target prices, and fair market valuations on over 5,500 equities trading on US exchanges (including over 700 international ADR's).. Research on each equity is updated every trading day to... More
My company:
ValuEngine
My blog:
valuengine.com/ve/ma...
  • Obama’s Home Bailout Bust 3 comments
    Jun 22, 2009 3:19 PM | about stocks: SPY

     

    Featuring Richard Suttmeier, Chief Market Strategist
     
     
    Today I comment on US Treasury yields, Comex Gold, Nymex Crude Oil, an update on bank failures, President Obama’s Making Home Affordable Program, and tracking the S&P 500 Bear Market.
     
    First of all let’s look at the weekly charts for the 10-Year yield, Comex gold and Nymex crude oil.
     
    The yield for the 10-Year should trade range between 3.5% and 4%, as the rise in yield is overdone.
     
    Increased supply is offsetting a potential flight to quality as the bear market returns for stocks. This week the US Treasury auctions $104 billion in new 2-Year, 5-Year and 7-Year notes.
     
    For gold I show the 200-week simple moving average as long term support at $731 and the $1,000 ceiling, which has gapped gold since March 2008. My annual pivot should remain a magnet at $891.
     
    Last week I predicted that crude oil would stay below its 200-week simple moving average at $74.54 and that oil would decline back into the zone of my annual pivots at $66.51 and $68.81 where it is today.
     
    My Second focus is on bank failures, which now total 40 year to date.
     
    Three more small private community banks were closed by the FDIC last Friday.
     
    Like most this year’s failures Southern Community Bank in Fayetteville Georgia, Cooperative Bank in Wilmington North Carolina, and First National Bank of Anthony, Kansas were extremely overexposed to Construction & Development Loans and the nonfarm nonresidential loans.
     
    These banks should have been warned at the end of 2006 when the US Treasury, Federal Reserve and the FDIC released their joint regulatory guidelines for these types of real estate loans. Again, our banking regulators have ignored this regulation throughout The Great Credit Crunch.
     
    These three closures cost the Deposit Insurance Fund by $363.2 million. The 40 failures in 2009 cost the fund $12.2 billion leaving the balance down to a trickle of just $6.7 billion.
     
    My third discussion is President Obama’s Making Home Affordable Program.
     
    So far $18.3 billion to bailout mortgage servicers has been disbursed to 16 recipients. Heading the list is the ghost of Countrywide, Countrywide Home Loan, which received $5.2 billion. In second place is JP Morgan’s Chase Home Finance with $3.6 billion. In third place is Wells Fargo with $2.9 billion.
     
    Isn’t it interesting that this program benefits the big four banks that are considered “too big to fail” a needed concept that our banking regulators want to get rid of. If you add in CitiMortgage and Bank of America the big four totals $13.6 billion or 74% of this bailout pie.
     
    This program is the incentive payments for mortgage modifications according to Obama’s Making Home Affordable Program. When you consider that only 60,000 homeowners have been helped so far the 16 recipients have received an astounding payout of $305,000 per mortgage modification.
     
    I received an email from someone trying to get his mortgage refinanced through Wells Fargo. He supplied all of information requested some 60 days ago. Last week he was told that Wells Fargo had three times as many foreclosures in May as they did in May a year ago, and that the bank does not have the staffing to look at his documents at this time. Wells is hiring outside consultants and they should be able to look at his case in another 60 days or so.
     
    My fourth focus is the weekly and daily charts for the S&P 500 to show the status of the Bear Market.
     
    The weekly chart for SPX shows overbought momentum and the failed test of the longer term down trend. A weekly close below my annual pivot at 910.8 is a warning.
     
    The daily chart shows the 200-day at 900.80 with the 50-day at 898.73. The S&P 500 has been above its 50-day simple moving average since March 31st.   
     
    If you have any comments or questions send them to Rsuttmeier@Gmail.com.
     
    Make sure to visit ValuEngine.com for more products and services, and have a great day.
    Themes: Yields, Gold and Crude Oil Stocks: SPY
Back To Richard Suttmeier's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (3)
Track new comments
  • It is estimated that Obama's plan could benefit 8 to 9 million homeowners from the new modification procedures. So how do you know you qualify for the Mortgage Modification? Check the website obamamortgage2009.blog.../
    to see if you qualify. I was also in trouble and I am glad I did check it before I talk to my mortgage company and it helped - howardamin, California
    3 Jul 2009, 05:26 AM Reply Like
  • This whole stimulus package is just part of the governments long term plan to take away the power of the people. Are we going to do something about it or be lazy and think someone else is going to do it for us? It is time for a revolution. We need to overthrow the government and take our power back. Before there is nothing we can do about it.. you should check obamamortgage2009.blog...
    4 Jul 2009, 04:47 AM Reply Like
  • Check out obamamortgage2009.blog... or obamamortgage2009.blog... There needs to be a program for the elderly but not quite to retirement age for mortgage modification when the have lost their job during this particular recession. I made a decent wage because I put my time into a company and now have no job. I am looking at $10 - to $12 hr jobs after working all my life. You can't make a mortgage payment on that kind of money. I will eventually lose my home.
    4 Jul 2009, 04:49 AM Reply Like
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.