#1) Raymond James strategist Jeff Saut gives the best explanation I’ve heard about this…
Even If Stocks Are A Bubble, Everyone Has To Keep Buying
we think the upside should continue to be driven by “game theory,” which suggests that the under-invested institutional portfolio managers have to buy stocks into year-end driven by their under-performance, their subsequent “bonus risk,” and ultimately their “job risk.”
#2) A Mad Rush as Gold Bugs Get the Boot
Fleets of armored trucks piled with gold bars and coins have been streaming out of midtown Manhattan in one unexpected consequence of the gold craze.
Amid gold’s rise — it has gained 32% this year and reached a record on Monday — investors have been loading up on bullion and coins. One big problem now is where to store it. The solution from HSBC, owner of one of the biggest vaults in the U.S.: somewhere else.
#3) FDIC Q3 Banking Profile: 552 Problem Banks
The FDIC released the Q3 Quarterly Banking Profile today. The FDIC listed 552 banks with $345.9 billion in assets as “problem” banks in Q3, up from 416 banks with $299.8 billion in assets in Q2, and 252 and $159.4 billion in assets in Q4 2008.
Note: Not all problem banks will fail - and not all failures will be from the problem bank list - but this shows the problem is significant and still growing.
#4) One in Four Borrowers Is Under Water
The proportion of U.S. homeowners who owe more on their mortgages than the properties are worth has swelled to about 23%, threatening prospects for a sustained housing recovery.
#5) Bets rise on rich country bond defaults (hat-tip The Automatic Earth)Gary Jenkins, head of fixed income research at Evolution, said: “The biggest single risk hanging over the bond markets is the rapid rise in public debt in the industrialised world. “If we get to a point where the market thinks the levels of debt are unsustainable, then we will see an almighty sell-off in the government bond markets, with yields soaring. Governments need to take action to cut deficits and debt.” Fitch Solutions, the data arm of the Fitch Group, said that there is almost as much uncertainty in the CDS market about the outlook for the developed economies and their bond markets as there is for emerging economies.
XX Sean’s note: Also, the Financial Times asks: Could sovereign debt be the new subprime?
#6) Today’s must-read from Naked Capitalism is tough slogging, but worth it: Goldman/AIG Conspiracy Theories: There’s a Reason They Won’t Go Away
#7) And I’ll close with the question of the week: “Why is Obama Championing Bush’s Financial Wrecking Crew?”
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