Are we approaching a recession?
Charts reveal growing risks
We first began publishing this report on November 9, 2006 after we noticed that an increasing number of indicators we follow were flashing warning signals. Our goal is to track the market leading technical and fundamental indicators to see what they are telling us. We update these charts as new data becomes available so be sure to check back at least once a week. The key takeaway here is that it's not a recession we should worry about, but the bear market that precedes it because that is where the majority of damage will be done to your portfolio. As we will see, economists and fundamental analysts have a lousy record at forecasting market slowdowns and recessions because most of them track data that lags the market, not leads it. We saw this clearly with the collapse of the housing market that began in mid-2005 with the breakdown of homebuilders. At the time the underlying fundamentals remained strong prompting the vast majority of analysts to recommend builders as a buy on the dips, not a sell. But as we know now, that was just plain bad advice. It is important to remember that past secular bear markets have begun on the backs of peak earnings, employment and a host of other economic metrics. Rather than track the numbers, it is crucial to instead track their rates of change. It is a sad reality of markets that at crucial times, the majority (including the professionals) is wrong. It is why bear markets are so devastating. In markets, especially at major turning points, the few hawks get fat feeding on the many lemmings. Our goal is to help you be a hawk and you can't be a hawk if you follow the crowd. Markets have been highly volatile of late and shocks have increased. What does it all mean? Here is a quote that may shed some light on what to expect... In 1929, days after the stock market crash, the Harvard Economic Society reassured its subscribers: “A severe depression is outside the range of probability” In a survey in March 2001, 95% of American economists said there would not be a recession, even though one had already started. Today, most economists do not forecast a recession in America, but the profession's pitiful forecasting record offers little comfort. – Economist November 15. Here are some questions traders and investors are asking.
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1. Is there a real estate bubble and if so, just how big is it?In measuring real estate prices, Robert Shiller’s inflation adjusted home price index is very useful. Using data going back to 1890, the last index low of 109.6 occurred in 1997 following the last bubble high of 127.5 in 1989. As we see from Figure 1, thanks to the low interest rate policies of Alan Greenspan and company, real estate has done extremely well since 2000 supercharged by 50-year low interest rates which drove the index up to 202.8 in 2006 or 60% higher than it had ever been in the past after adjusting for inflation. It a nutshell it seems that the majority of economists now believe that more of what created the bubble in the first place will prevent the bubble from popping proving the wisdom of the age-old adage, hope springs eternal, holds especially true in the ivory towers of high finance today. When one takes a serious look at the chart, it becomes painfully obvious what we should expect next after experiencing the largest real estate price bubble in history. Research by highly-respected money manager Jeremy Grantham, who has studied the major financial bubbles throughout history, showed that in every case and without exception, prices following the bursting of each bubble reverted to their historic median or mean at a minimum. More commonly, prices fell well below the mean. Looking at Figure 1, a reversion to the long-term median price which is very close to the average price (purple dashed line) implies that prices have another 47% to fall! But even if home values only revert back to the last bubble high (a correction this mild has no historical precedent) still implies another further 37% drop in national home prices. 
Figure 1 – Yale economist and author Dr. Robert Shiller chart showing his home price index (HPI) of inflation-adjusted real estate prices over the last two hundred years. Source - Irrational Exuberance. Similar picture when looking at the Case-Shiller Home Price Index based on paired-sales (repeated sales of the same homes). As we see in this next chart, a reversion to the mean given the current index value (September) of 195.62 compared to a 20-year median price of 82.2 suggests prices could fall more than 50%! The index peaked at 206.52 in July 2006. The 20-city composite index is now down 4.95% in the last year and according to their national index, home prices are down 4.5% year-over-year. 
Figure 2 – Home prices in 20 of the largest cities across the nation fell 6.1% in October versus a year ago according to the Case-Shiller Home Price Index that unlike median price data used by government and the National Association of Realtors, relies on much more accurate paired sales data. Home prices in the 20-city composite index have fallen 6.6% since their peak in July 2006 and 7.3% for the 10-city composite index. It is the 10th consecutive month of declines and the 23rd month of decelerations in home prices. This indicator clearly shows that home price declines continue to accelerate which does not bode well for a bottom in the housing market anytime soon. This is further supported by the fact that National Association of Realtors (NAR) median prices have dropped from a high of $229,200 in June to $207,800 in October, a drop of 9.3% in just four months! 
Figure 3 – In 2005 when home sales peaked, the inventory of unsold homes was 2.8 million homes – a 4.5 month supply. In October the inventory of existing homes for sale jumped to 4.53 million – a 10.8 month supply according to the National Assocation of Realtors. As we see from this chart, while prices have just begun to plummet, inventories are accelerating which does not bode well for an early recovery. By September the number of vacant homes on the market had soared to 2.2 million according to the latest NAR data but dropped off slightly, prompting some hopeful comments from the organization. Our take is that it was simply a temporary reprieve, especially when you consider that there are now a total of 17.9 million vacant homes in the U.S. (up 7.8% from a year ago according to the US Census Bureau) and no one we have spoken to can tell us how many of those are foreclosures to be sold by banks or lenders. 2. Analysts are saying the worst of the sub-prime and mortgage problems are over. Are they right? No one really knows for sure but one thing is clear. The current mortgage crisis is getting worse and this will put added downward pressure on real estate prices across the nation. According to First American LoanPerformance, the percentage of sub-prime mortgages more than 60 days in arrears surpassed 20% in August, up from 17.1% in June. Mark Zandi of Economy.com estimates that of the $2.45 trillion in highly risky mortgages (sub-prime and Alt-A) outstanding, as much as a quarter could suffer defaults in the months ahead according to a report in the Wall Street Journal. Nationwide, foreclosures are rising rapidly. RealtyTrac reported that home foreclosures nearly doubled in October versus October 2006 with 224,451 filings up 94% from a year earlier. Expectations among mortgage specialists are that approximately 2 million Americans could lose their homes through foreclosure but that assumes that prices don’t continue falling and interest rates remain relatively stable. In another report, the Center for Responsible Lending said that sub-prime foreclosures will cut U.S. home values by $233 billion and impact an estimated 44.5 million homes in areas surrounding homes subject to foreclosure. Yes, it could be worse but that doesn't include foreclosures resulting from other risky loans like Alt-A which represent an even larger number of mortgages. The challenge is that increasing foreclosures puts further downward pressure on home prices which in turn forces more people into foreclosure in a self-perpetuating spiral. Zandi expects national home prices to drop 10% from their peak (2006) to fourth quarter 2008 which would erase more than $2 trillion in home values. According to the latest Case-Shiller Home Price Index, prices peaked in July 2006 and were down 4.5% a little more than a year later (August 2007). As we see in Figures 1 and 2, the price declines are showing no signs of moderating nor will they with the high levels of inventories (figure 3).
It is important to point out that these foreclosure estimates assume modest home price declines and no recession. If we enter recession or home prices decline more than forecast, the situation only gets worse. How did property values get to be so high? Good question. In an effort to avoid recession in 2001, Alan Greenspan and the Fed drastically reduced the Fed funds rate from 6.5% to 1% over a 30-month period. It wasn't until June 2004 long after the recession ended that rates again began to rise. This led to "wild and woolly, wholly reckless abandon" in mortgage lending practices including zero down, negative amortization, adjustable rate and an assortment of other new and exotic mortgages with low teaser rates that encouraged everyone from the corporate executive to the pool boy to buy a home or three in the hopes of flipping them to make a quick profit. All the traditional metrics used to measure real estate value went out the window and greed reigned supreme. In this next chart we see how far out of whack home prices actually got when compared to real wages. Historically when real estate prices have diverged significantly from real wage growth, a correction ensued. It also means that prices still have a long way to fall to return the wage-property price relationship to historic levels. 
Figure 4 – Chart comparing year-over-year changes in national home prices (black line) versus real wage growth (red line). Orange arrows show the large difference in growth rates between 1997 and 2006. As we see from the trend lines of home prices (black dashed line) and real wage growth (red dashed line), the two completely decoupled between 1997 and 2006. Data - Case-Shiller Home Price Index and Bureau Labor Statistics While it is difficult to know exactly how bad the mortgage situation will get, we do have a very useful tool for measuring mortgage market health called the ABX Index. Markit.com compiles data on 20 different types of sub-prime instruments from prime to triple B minus and puts them in chart format for easy analysis. We have compiled the composite of 15 ABX sub-prime mortgage indexes into one chart.  Figure 5 – What is really happening in the mortgage market? Here we the composite of 15 different asset-backed credit default swap indexes from AAA prime to BBB minus sub-prime mortgages monitored by Markit.com. Set at a value of 100 in January, the index had fallen 40% by mid-August before rallying into the second week of September. Since then the composite has declined another 24%. Overall the index is down more than 45% in just 10 months. ABX-HE indexes provide a pulse on the health of the mortgage market as well as insights into the strength of the overall housing market. These recent drops and ongoing build in vacant home inventories bring into serious question Countrywide Financial’s (CFC) optimistic comments that earnings should swing back to positive in Q4-07 and Friday’s 33% rally in the stock price on the news. For a more detailed explanation of the ABX-HE indexes, please see http://tradesystemguru.com/content/view/72/58/#ABX
Figure 6 – ABX-HE-BBB (triple B minus) are the worst performing sub-prime loans, the value of which have dropped more than 80% since January. Since the second week in September, they have been more than cut in half again. 3. So housing markets have deteriorated but is that enough to cause a recession? The National Assocation of Home Builders (NAHB) Housing Market Index (HMI) hit an all-time low of 19 in October and November. That's bad but what does it mean for the economy? In his August 21, 2006 newsletter, Merrill Lynch economist David Rosenberg provided us with a new indicator. He had been tracking the S&P500 and the National Association of Home Builders (NAHB) housing market index (HMI) advanced 12 months and found an interesting relationship. He found that the HMI led the S&P 500 by 12 months and with a near-80 percent correlation – a correlation that had strengthened over time owing to the growing influence that the real estate market has exerted on the overall economic and financial landscape over the past five years. Between 1985 and 1995 the correlation was limited at best but the increasing correlation over time on the chart is clearly evident. Between 1996 and 2006 the relationship strengthened. But while the HMI began collapse in 2006 in Figure 6, the S&P500 continued to advance. Does it mean that the relationship is dead? More likely it signals an increasing lag due to the importance that housing played in the economy, the incredible excesses that built up in housing markets thanks to the flood of cash that became available thanks to easy if not downright irresponsible credit lending practices. This has been compounded by the current state of denial of the consumer who continues to wrack up debt as the economy weakens. What Figure 6 is saying is that the S&P500 has the potential to experience a drop in the coming year (or so) that will surprise even the most aggressive bears. It is interesting to note that David Rosenberg has upgraded recession risk from 25-30% then to 65% recently. 
Figure 7 – Monthly chart of the National Association of Home Builders housing market index (HMI) advanced 12 months versus the S&P500 with the growing correlation between 1996 and 2006 then mysterious divergence. In November, the NAHB HMI remained at its all-time low of 19 for the third consecutive month.
Next we look at an indicator that has taken on increasing importance when housing was a large contributor to economic growth. Put together by Hugh Moore of Guerite Advisors, this chart of residential fixed investment (RFI) to GDP shows that each time RFI to GDP has fallen by more than 10% from a peak, the economy has ended in recession. These peak-to-troughs have taken, on average, 28 months. As of this latest chart from late August, RFI had fallen 23.4% from its peak in Q4-05 and is showing no signs of bottoming according to Moore. 
Figure 8 – Residential fixed investment to GDP showing past recessions in cyan. The drop in 2000 before the last recession was slight indeed compared to the most recent drop. 
Figure 9 – Chart showing peaks and the percentage declines going back to 1959 showing that each time housing starts have declined significantly, a recession has followed with one exception and that was in 1967. 
Figure 10 – Another chart that compared total construction with residential construction showing that with one exception (1966) recessions have been preceded by significant declines in residential and total construction. We are again in negative construction territory. As we see from the chart, construction never went negative in 2001 thanks to the cheap money policies of Allan Greenspan and the Fed. 4. Household wealth is way up over the last decade. Won't that help us avoid a recession? Yes it is and the biggest single component of household wealth now is real estate holdings. However, the impact falling property values will have on wealth aside, it's household debt that's the problem as the next chart shows. Every recession since 1960 has been preceded by a 40% or greater drop in total household debt with two exceptions. As we see from Figure 10, the 61.6% drop in 1967 was not followed by a recession and the recession on 2000 was marked by an increasing in total debt – but this was the first time in history this occurred. As of the latest figures, total household debt has fallen nearly 40% from its peak but given the current mortgage and credit crisis, the challenges are just beginning. If history is any guide, this does not bode well for the health of the economy over the next 12 to 18 months. 
Figure 11 – Chart of the year-over-year change to total household debt which averaged more than $112,000 per family in May. 5. The Treasury yield curve did invert but it has steepened in the last few months. Isn't that bullish? Yes except that every time it has been seriously inverted in the past, a recession has followed and in most cases after it steepened again. Here is a chart of 10 year minus 2 year U.S. Treasury yields showing that each time since 1977 that the relationship turned negative, a bear market and recession followed – the longest lag from negative to recession was 28 months. Although the relationship last turned negative in January 2006 and while the curve has since turned positive, this in no way minimizes risks going forward. 
Figure 12 – Monthly chart of 10 year Treasury yields minus 2 year yields. Gray boxes show bear markets with corresponding drops in the Dow Industrial Average. 6. Jobs and wage growth remains relatively strong. Isn't that positive? Non-farm payrolls jobs growth has been positive and as we see in Figure 15, wage growth has been positive since 2006 but it's the rate of change that is causing concern. In this next chart from Guerite Advisors, Moore points out that while lagging, year-over-year changes to non-farm payrolls provides a valuable recession warning. Payrolls have not yet fired a recession warning signal but as we see from the next chart, it looks to be only a matter of time (especially when we look at Figure 14). Another concern is that the trend line for non-farm payrolls shows a slow but stead decline over the last two years and the number has been steadily revised downward. 
Figure 13 – Year-over-year changes in non-farm payrolls jobs growth numbers.
However, factor in temporary services employment changes year-over-year and we get further confirmation of recession risk. The major drawback is the temp services employment published by the Bureau of Labor Statistics, is a relatively new indicator with a short history but as the chart shows, drops into negative territory have lead non-farm payrolls in the last two recessions. 
Figure 14 – Relatively short but strong relationship between temporary services employment and non-farm payrolls showing past recession warnings. In his excellent book Ahead of the Curve, Joe Ellis discussed a number of leading economic indicators including real average hourly earnings. Real earnings (that is earnings after adjusting for inflation) recovered very slowly after the last recession and as we see from the chart below, earnings fell between 2004 and 2006. Perhaps of greater concern is the fact that peaks in earnings growth (red arrows) have occurred ahead of a number of recessions. As Ellis comments in his book, what is different this time around is that although wage growth has remained muted, consumer spending has not thanks in a large part to mortgage equity withdrawals – the ability of homeowners to borrow against rising home values to finance consumer purchases. Unfortunately, falling real estate prices is now making this a lot more difficult. Is the most recent peak in earnings growth another warning sign? 
Figure 15 – Chart showing that recessions have historically followed (or at the very least coincided with) peaks in real earnings growth. Joe Ellis discusses this and a number of other great leading economic indicators in his book Ahead of the Curve. According to Moore, Real Equipment and Software Fixed Investment (RESFI) in this next chart measures corporate America's willingness to invest in additional productive capacity. Since 1960, RESFI has been an excellent barometer for the general economy and recessions in particular. Each time the year-over-year increase in RESFI has fallen below zero, a recession has followed, with two exceptions. The two exceptions were the "mini-recession" of 1967 and the mid-decade slowdown of the 1980's. Both periods produced shallow and short-lived signals. The current RESFI reading has been negative for two quarters and shallow like the two exceptions noted above. A prolonged or increasingly negative signal would indicate a very high-risk of recession. 
Figure 16 – Chart showing year-over-year changes to real equipment and software fixed investment (RESFI) since 1960 and past recessions in orange. Finally, here is the granddaddy of indicators published by Moore that incorporates 12 different metrics into one showing past success at predicting a recession. As we see, it has been very accurate in the past but the amount of advanced warning varies widely. It began to flash red in May 2005 so the signal is already more than two years old. The longest warning on record was the signal that fired in 1966 followed by the 1970 recession. While there is a chance things will be different this time, given the number of warnings, chances are it won’t be.
Figure 17 – Guerite Advisors recession indicator plotted with the S&P500 going back to 1960 with recessions marked in cyan that began flashing red May 2005. Here is the latest chart from Hugh Moore of Guerite Advisors with the following explanation. "Since the Guerite Indicator signaled high-risk conditions in late 2006, it has not reversed itself and has continued to be confirmed by additional robust recessionary indicators. Currently, one of the most broadly-based Federal Reserve Bank indicators is at the threshold of a recessionary signal. Unless the economy changes direction – and quickly – it is highly probable that the Guerite Indicator’s recessionary signal will again be proven correct. Such an outcome will prove difficult for the U.S. equity markets." 
7. Even after the recent corrections, the Dow and S&P500 remain near all-time highs. Isn't that bullish? Yes but there are a number of sectors now showing signs of stress. The first is the Dow Transports. The last time the Transports began to fall while the Industrials rallied was in the summer of 1999 eight months before the market began to fall apart. 
Figure 18 – Chart comparing the Dow Jones Industrial Average versus the Dow Jones Transports Average in 1999 - 2000 showing how Transports began to divergence negatively from the Industrials in May 1999. Chart GenesisFT.com And the Dow Transports is breaking down again... 
Figure 19 – Chart showing the Transports negatively diverging with the Industrials in early August 2007. Another recession warning? Chart GenesisFT.com
So are the Financials... 
Figure 20 – Weekly chart of the S&P500 and VectorVest Financial sector index showing how the Financials led the market melt in April 2000 followed by the start of the bear market later in the year by the broader market. 
Figure 21 – Here is a chart showing weekly charts of the Financial sector (blue) together with Retail (cyan), Banks (red) and the S&P500 (black). As we can see, with the exception of the S&P500, these sectors have all broken significant support levels (red arrows), the latest being the Retail sector which broke support in late October. This shows a clear rotation lower and is decidedly bearish for the broad range of stocks. 8. Aren't corporate earnings still robust? With more than 4000 companies having reported Q3-07 earnings and reporting season pretty much over, earnings are down 21% compared to the same quarter last year. This is a big drop from the overall 13% improvement last quarter versus the same quarter the year before. It is interesting to note that financials including banks and brokers have seen earnings fall 27% from the same quarter last year versus an increase of 13% in Q2-07. Not only is earnings weakness troubling, the fact that the financial sector has broken down so rapidly and given its past record of leading markets should be an even greater concern – one that the majority of fundamental analysts (and economist) seem to ignore. 
Figure 22 – Chart showing slow but steady deterioration in earnings and negative trendline (black) with a big 21% drop in the latest earnings reporting season. As earnings have dropped gone is one major reason for bullishness. 9. But Current P/Es Are Reasonable... Isn't that bullish?
I heard a lemming analyst on Bloomberg recently claim that because the S&P500 price/earnings ratio was relatively low (around 14), that stocks were fairly valued so should remain strong. As we see from the chart above, the first big challenge with this argument is that earnings are depreciating. But aside from the direction earnings are heading, are price/earnings ratios of any benefit in knowing where stocks will go next? The answer is yes but not in the way that many analysts would have you believe. 
Figure 23 – Here is a weekly chart of the VectorVest Composite Index (VVC) of more than 8200 stocks trading on US exchanges from 1996 to present showing the correlation between the price of US stocks and the composite price/earnings ratios. At the peak of the market in March 2000, (red arrow in above figure) stocks were trading at 32 times earnings. In July 2002 after stock prices had been dropping for more than two years, they were trading at 41 times earnings and just after the market bottomed and had started to recover (May 2003), PEs spiked to more than 60. The moral? It makes at least as much sense to buy PE spikes as sell them. The reason? Stock prices generally lead earnings improvements when looking at the larger indexes. The rate of change of earnings is a more reliable indicator but even this metric tends to lag stock price. PEs rise for two reasons. First, earnings deteriorate (which looks to be occuring now) or investors anticipating higher earnings bid stock prices up. In March 2000 composite P/Es for more than 8000 U.S. stocks peaked at 31.88. P/Es for this index hit 32.66 on October 12, 2007. As of November 16, P/Es were 30.4. So what? Peaking PEs mean one of two things. We are at a bottom and a recovery is underway (that if real will be followed by rising earnings), OR we are at a market peak and stocks are getting ready to roll over. I have yet to see any studies showing that PEs provide reliable buying or selling signals. Not much of an indicator in my books and certainly no proof that we will not have a bear market and recession... 10. But the Fed has been cutting interest rates. Isn't that good for stocks? I have seen reports saying that when the Fed cuts rates, it's good for stocks in the past so decided to check it out. The two charts below show the average Fed funds (overnight) rate versus the S&P500 Index in 2001, the last time they began to cut rates in earnest, compared to now... In the first week of January 2001, the Fed cut the Fed funds rate 50 basis-points from 6.5% but even though the Fed continued cutting rates over the next two years (ultimately more than 80%), while there were short-term bounces, the value of the S&P500 Index had been nearly cut in half by late 2002! More importantly, during the two biggest bear markets/recessions of the twentieth century (those starting in 1929 in the U.S. and 1989 in Japan), falling interest rates were accompanied by significant drops in stock prices. Falling interest rates are a sign of economic slowdown and have been better times to sell stocks, not buy them. 
Figure 24 – In the fall of 2000, the S&P500 Index began dropping but it wasn’t until the first week in January 2001 that the Fed reacted and began dropping the Fed funds rate from 6.5% to 6%. But as we see, even though the rate dropped to below 2% over the next 18 months, stocks continued to plummet with the SPX losing nearly 50% of its value. Chart Metastock.com 
Figure 25 – At least this time around the Fed did not take so long to react to financial problems and drop the rates. But as this chart indicates, the Fed's two rate cuts (and huge cash infusions) have failed to help stocks and as we see above, a number of pivotal sectors have rolled over. If the last bear market is any guide, stocks should continue to encounter growing headwinds as the overnight rate declines. Chart Metastock.com Bernanke lowered rates more quickly in response to market weakness compared to the last market melt in 2000 under Greenspan. But will it be enough to re-energize stocks? This strategy certainly didn't work last time. 11. Autombile/RV manufacturers are good recession indicators. What are they saying now?
Next, let's look at two more industries that have led markets in recessions in the past. According to a recent Bloomberg report, annual RV sales declines have led the economy into recession over the last 30 years. Winnebago, one of the largest RV manufacturers, has seen its stock plummet 35% so far this year and RV manufacturers have seen sales drop 10% in 2007 for the first decline since they dropped 14% in 2001 (see article below). Here we see the RV and Auto/Truck indexes showing breakdowns in 2000 that have recently broken key support levels again. These are two more bearish indicators. 
Figure 26 – Weekly performance chart showing the VectorVest Building (Mobile/Mfg/RV) manufacturers of RVs and the Auto & Truck (Mfg) automobile manufacturers indexes showing peaks in each but that now look to be in the process of breaking down again (see red arrows - right hand side). Chart VectorVest.com 12. The dollar has fallen and commodities soared but what does that mean for stocks? Some stocks have done well in real terms, especially those on European, Canadian, Australian exchanges denominated in other currencies that have greatly outperformed the U.S. dollar. Since mid-2001, the U.S. Dollar Index which measures the greenback against six major currencies is down nearly 40%. Against commodity-rich currencies like the Canadian and Australian dollars, it is down more than 60%. So how have U.S. stocks performed when denominated in other currencies or say... gold since 2000? 
Figure 27 – Weekly chart of the S&P 500 Index in euros showing that it has recovered just 25% of what it lost between 2000 and 2003. Chart GenesisFT.com 
Figure 28 – Weekly chart of the S&P 500 Index in Canadian dollars that is up just over 20% from the 2003 low. Chart GenesisFT.com 
Figure 29 – Weekly chart of the S&P 500 Index in gold shows that the S&P is now below where it was in 2003. Chart GenesisFT.com 
Figure 30 – Think techs are doing well? Here is the weekly chart of the Nasdaq Composite in gold showing that it too is below where it was in 2003 and still falling. Chart GenesisFT.com For U.S. stocks in real terms, the recession of 2001-02 is still underway... We will be updating this report as new information becomes available so please stay tuned!
Articles of interest U.S. Economy: New-Home Sales Tumble to 12-Year Low
http://tinyurl.com/2ywf47 Ominous signs for students of history – FT
http://tinyurl.com/2xd6w8 'Fear' index jumps amid new worries over banking losses – FT
http://tinyurl.com/2g37s5 Subprime crisis hits papers' property adverts – FT
http://tinyurl.com/2zv54y Dollar's Share of Currency Reserves Falls, IMF Says
http://tinyurl.com/29z9pu
Subprime's Hidden Cost Is Shrinking Leverage
http://tinyurl.com/32navo Subrpime Woes Mount – Florida Suspends Withdrawals From Investment Pool
http://tinyurl.com/29vpv3 U.S. Foreclosures Almost Double on Higher Adjustable Mortgages
http://tinyurl.com/2v4wam Kohn Sees Risk of Reduced Credit From Market Upheaval
http://tinyurl.com/2stavy Citigroup Pays Junk Rate to Keep Dividend After Mortgage Losses
http://tinyurl.com/2hyxwh Case-Shiller Home Market Index posts record decline - Nov27-07
http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_112766.pdf
Recession Signs Grow as Winnebago Leads First RV Dip Since 2001 - Nov27-07
http://tinyurl.com/2kt8xa America's vulnerable economy - Economist http://tinyurl.com/2ru7bc Link to book site – Ahead of the Curve (some very interesting charts!) http://www.aheadofthecurve-thebook.com/charts.html Knowing the known unknowns of a possible market disaster American Gangster's Wad of Euros Signals U.S. Decline http://tinyurl.com/2zctry Chronology – The Credit Crunch of 2007 http://tinyurl.com/27j79d
Asia would be hit by a U.S. recession: Morgan Stanley http://tinyurl.com/2gpc6s U.S. could face $2 trillion lending shock http://tinyurl.com/yund9d Countrywide loans drop 48 percent http://tinyurl.com/2zx5o8 Bank of America sees $3 billion debt write-down http://tinyurl.com/2tk4hh Goldman Held Bigger Level 3 Share Than Citi, Merrill http://tinyurl.com/3cu3kl Miami condo at ground zero in mortgage fraud http://tinyurl.com/26mzbu Top 100 metro area foreclosures (click “print this” on table half-way down)
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