Richard Suttmeier is the Chief Market Strategist at www.ValuEngine.com.

ValuEngine is a fundamentally-based quant research firm in Princeton, NJ. ValuEngine

covers over 5,000 stocks every day.

A variety of newsletters and portfolios containing Suttmeier's detailed research, stock

picks, and commentary can be found HERE.

Suttmeier's Four in Four video can be watched on the web HERE.

October 12, 2009 – Fed Minutes will provide Reality Check

The Shape of the Economic Recovery, the Congressional Oversight Panel shares my
concerns about housing and banking, mortgage delinquencies top 9%, the minutes
from the September 22 / 23 FOMC should clearly state the Fed’s worries about the
economy.
We are in an L-Shaped Recovery, which means that the Recession is not over
The bullish economists and strategists site text book statistics from past recessions that
“prove” that the Recession is over. Unfortunately, there are no test books that cover the first
ever “The Great Credit Crunch”. The world has never been as overleveraged in debt and
derivatives, and the numbers associated with the problems are staggering.
What shape is a non-recovery? It’s L-shaped, with the potential of being a series of “L”
shapes. It has nothing to do with GDP growth expected to show 3% or higher growth in Q3,
but the labor market, which continues to deteriorate.
The National Bureau of Economic Research time stamps the start and end of Recession.
They base their judgments on job creation, not GDP growth. The employment data in
September was worse than anticipated with hours worked near a record low of 33 hours.
Counting part time workers and those who left the work force the Unemployment Rate is
above 17%, not 9.8%.
My assessment may not be consensus but if I am correct the Dow will not be able to sustain
gains above 10,000, which should be challenged this week.
The Congressional Oversight Panel is critical of President Obama’s housing plan and
TARP
Elizabeth Warren the head of the Congressional Oversight Panel gets no respect among the
banking regulators and Congress, because she sees the risks I see in the Housing and
Banking Sectors.
While the Treasury Department touts the successes of the Obama foreclosure prevention
program the COP tells it like it really is. The COP criticizes the Administration's Mortgage-
Modification Program as not being timely in helping Americans avoid foreclosure, while the
Obama team says that the program reached a major benchmark ahead of schedule.
The COP reports that the Home Affordable Modification Program (HAMP) will fall far short of
helping the estimated three to four million homeowners the Administration says will qualify.
The US Treasury reported that 500,000 homeowners started a 90-day trail mortgage
modifications, but as of September 1st only 1,711 have been approved for permanent loan
modifications.
With regard to TARP, the COP states that the “too big to fail” banks are bigger, small banks
will continue to fail, and troubled assets are more troubled today. The year ago banking
problems remain problems today.
Congress and our banking regulators are ignoring the Congressional Oversight Panel.
The percentage of delinquent single family residential mortgages is above 9%
In the prior housing crisis this measure peaked just above 6% in 1985 before the asset
meltdown of 1988 through 1992, which is another leading economic indicator.
The problem today is that delinquencies are affecting FHA in addition of Fannie Mae and
Freddie Mac.
The minutes of the September 22 / 23 will be crucial for the continuation of the stock
market rally
The stock market peaked on September 23rd following the Fed Statement. Interpreting the
Fed Minutes and the stated concerns could be the catalyst for economic and stock market
reality.
Send me your comments and questions to Rsuttmeier@Gmail.com. For more information on
our products and services visit www.ValuEngine.com
That’s today’s Four in Four. Have a great day.

Richard Suttmeier
Chief Market Strategist
ValuEngine.com
(800) 381-5576

As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website
www.ValuEngine.com. I have daily, weekly, monthly, and quarterly newsletters available that track a variety of
equity and other data parameters as well as my most up-to-date analysis of world markets. My newest products
include a weekly ETF newsletter as well as the ValuTrader Model Portfolio newsletter. I hope that you will go to
www.ValuEngine.com and review some of the sample issues of my research.

“I Hold No Positions in the Stocks I Cover.”