Fun Times Ahead

I don’t have much time to inundate you guys with charts this weekend as I’m getting ready to head out to Houston tomorrow afternoon. However, I took some time today to update my SPX/mortgage resets correlation map for my intrepid stainless steel rats:

The first version of this I posted back in August anticipated a top around 1050 – alright, thus far I have been 50 SPX points off – can you find it in your heart to forgive me? Either way there is a lot of fun ahead as after a one year reprieve starting October 2008 the rate of defaults is now again expected to increase steadily and mercilessly. In addition a chronic and growing shortage in consumer credit will negatively affect the X-Mas shopping season and the collective misery of retailers will show up nicely in the next earnings season. Hey, maybe the next ‘lowered expectation’ will be – hey, we weren’t forced to file for chapter 11 – green shoots! 🙂

BTW, here’s the final design of our evil-shirts – click on the image for a larger version. I really like the front/back combo with Mr. Evil on the front riding the swan into the abyss.

Weekend reading assignment: Great article by Robert Prechter:

Perhaps the single greatest reason for the unbridled expansion of credit over the past 50 years is the existence of the Federal Deposit Insurance Corporation, another government-sponsored enterprise created by Congress. The coming rush of bank failures is an outcome made inevitable the very day that Congress created the FDIC. Today, most banks are insolvent, and the FDIC is broke. Read More

Enjoy the remainder of your weekend – I will be back Tuesday morning. In the interim Gmak, Berk, and Michael are in charge of the place.

Cheers,

Mole