Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

US Banking Sector Suffers Worst Decline Five Years As Banks to Declare More Bad Debt Write-downs

Stock-Markets / Credit Crunch Nov 03, 2007 - 03:08 AM GMT

By: Anthony_Cherniawski

Stock-Markets Best Financial Markets Analysis ArticleYesterday the U.S. banking index suffered its worst 1-day decline in five years, according to the London Financial Times . The biggest single reason for the decline in equities was the revival of worries that big banks in the US and Europe would unveil further credit write-offs. Another focus of concern involved a less well-known pillar of the global financial system – smaller specialist insurers that provide credit guarantees to lenders and investors.

Meanwhile, the Federal Reserve pumped an additional $41 billion into the banking system on Thursday in what seems to be a growing bailout problem that won't go away. This is the largest single infusion since September 2001.

So where do we find our major banks now? Could they be “illiquid, inflexible and capital deficient?” Thanks to Best Minds, Inc ., here is an article summarizing a recent history of our banking system through the eyes of Irving H. Sprague, Chairman and Director of the FDIC through 1986.

Contagion fears are growing that one or more of our major banks are in deeper trouble than first realized. This may strike a blow against consumer and investor confidence that “all is well” among our banks. Some pundits are beginning to call this month Black November, reminiscent of the crash of 1987. So the investors who believe that a simple rate cut will solve our financial problems may wish to re-examine our current conditions and acquaint themselves with similar circumstances in the past. Expect more of the Bernanke Credit Crunch .

Japan 's market reprieve is over…

…as a brief corrective rally put on its finishing touches yesterday morning. This morning it fell over 2% as the market contagion from the U.S. moved around the globe. The Nikkei put in a 1-week closing low after several days of a rally, partially fuelled by the Federal Reserve rate cut. But the news that Citigroup might not be able to support its dividend rate dampened investors' ardor for stocks, even in Japan .



Shanghai market rally cut short.

The Shanghai market stumbled another 2.31% in overnight trading, cutting short the potential for new highs in the rally. The fact is all of the global markets have put in reversals in October. One may also consider that China has troubles of its own, including a strong central government that still tries to run the economy by command. This week it decided to raise fuel prices , which sent the market tumbling.



Ready for wave 3?

The S&P 500 also staged a rally that ended with the second rate cut. That's right. The rate cut that was supposed to rally the markets to new highs fizzled. Instead, the simmering credit market , which had been put on a back burner, boiled over again. "The situation is now more negative than in the summer," said Pete Nolan, a portfolio manager at Smith Breeden Associates in Chapel Hill , N.C. He said that "in many cases, the fundamentals are catching up" with investors' worst fears. What to expect? Read my most recent article for an overview.



Treasury bonds making new highs.

Long-term Treasury prices are breaking out to new highs as treasury bonds and note benefit from investor concerns. The old maxim, “better be safe than sorry,” seems to apply here. The “ doom and gloom ” scenario is beneficial for bonds, but what is noteworthy is that bonds had a solid run since June. Stay close to the door on this one.




Number of homes facing foreclosure doubles.

A soaring number of U.S. homeowners struggled to make mortgage payments in the third quarter, with properties in some stage of foreclosure more than doubling from the same time last year, a mortgage data company said Thursday.

A total of 446,726 homes nationwide were targeted by some sort of foreclosure activity from July to September, up 100.1% from 223,233 properties in the year-ago period, according to RealtyTrac.



Will the Fed intervene on the U.S. dollar?

The dollar has weakened against all 16 major currencies this year as Fed rate cuts dimmed the allure of U.S. assets. The U.S. Dollar Index traded on ICE Futures U.S. in New York fell to as low as 76.242 today, the weakest since its inception in 1973.

With al the doom and gloom surrounding the dollar, wouldn't it be interesting that the dollar might be in higher demand as the other major markets decline. Remember, as much as the dollar is looked down upon, there is no other reserve currency in times of trouble.



$800 per ounce hit and exceeded.

From MarketWatch , “ Gold for December delivery rose $11.30 at $805 an ounce in early afternoon trade on the New York Mercantile Exchange. Earlier, the contract hit an intraday high of $807.90, a level not seen since 1980.”

Before you back up the truck to invest in gold, consider that the rally is now 55 days old, a bit long-in-the-tooth for the average rally. Also consider that there are 5 waves up from the June low. I would call that a high risk play at this time.



Higher prices don't mean oil companies profit.

Exxon Mobil, the world's largest oil company, said Thursday that quarterly profit unexpectedly dropped the most in three years because of reduced gasoline output and prices. 70% of all the world's oil reserves are owned by sovereign nations. Robert Sweet of Horizon Investment Services in Hammond , Indiana , said: "High oil prices were a disaster for a company like Exxon with a large refining business because that means their raw material costs were incredibly high. The pressure on profits could persist if oil prices remain high."




Natural gas prices follow the other energy markets.

Colder weather in the lower 48 states and higher energy prices have been affecting the price of natural gas, says the EIA Natural Gas Weekly Update . The central planners of China have also decided natural gas prices are " seriously low " and it plans to adjust costs for industrial users and retail prices for car drivers soon, following a 10 percent rise in fuel costs on Thursday.




Our National Character at risk…The Devil is in the details.

Consider this article by J.R. Nyquist , “T he problem of terrorism and rogue states is linked with the problem of drug trafficking, organized crime, nuclear proliferation and the ongoing campaign of Russia and China to displace the United States as the world's leading power. While the dollar falls and the American economy begins to breakdown, consider whether the erosion of national character is connected to recreational drug use – and whether recreational drug use has been encouraged by hostile powers.”

It doesn't pay to think of it as a “victimless crime.” We are all potential victims of corruption and drug use.

We're on the air every Friday.

Tim Wood of , John Grant and I have had a running commentary on the markets again this week. You may listen to our comments by clicking here .

Please make an appointment to discuss our investment strategies by calling Claire or Tony at (517) 699-1554, ext 10 or 11. Or e-mail us at .


Anthony M. Cherniawski,
President and CIO

As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

Disclaimer: It is not possible to invest directly into any index. The use of web-linked articles is meant to be informational in nature. It is not intended as an endorsement of their content and does not necessarily reflect the opinion of Anthony M. Cherniawski or The Practical Investor, LLC.

Anthony M. Cherniawski Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in