If you thought the fallout over the subprime lending “scare” had already taken place and the market was finding it’s bottom, I think its time to reevaluate that theory. As 3rd quarter results loom over the megacap financial institutions, it’s expected to see $35 billion or more put on the books as bad debt… yes, $35 billion.
According an analyst at JP Morgan, this will effectively wipe all profits off the books. According to Kian Abouhossein, “Banks will have made almost no money over the last quarter. Profits will be close to zero.”
Despite Greenspan’s possible actions that planted the seeds for this mess, he is economically astute beyond most. He recently told us, “The behavior in what we are observing in the last seven weeks is identical in many respects to what we saw in 1998, what we saw in the stock-market crash of 1987, I suspect what we saw in the land-boom collapse of 1837 and certainly the bank panic of 1907″
I’ve had a bearish outlook, but I am now I am considering only taking short position setups in swing trades. Remember, when the market is bullish, bullish setups have better expectancy. When the market is bearish, bearish setups of better expectancy.
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