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 and ForexTV Markets Review can be watched on the web
HERE.

November 30, 2009 – Financial Time Bombs Keep Ticking

Dubai World is just one financial time bomb. Hotel owners are falling behind on Commercial
Real Estate Loans. More help for struggling homeowners, but Fannie Mae tightens lending
standards.
The Dubai Debt Issue is Just One Financial Time Bomb
As I continue to dig deeper into the FDIC Quarterly Banking Profile there are many ticking time bombs
as many loan categories continue to deteriorate and no one knows the risks embedded in the $206.4
trillion in Notional Amount of Derivative Contracts. This is a new high for this category and is up 16.5%
year over year. How many more $60 to $80 billion Dubai Bombs are there, and which US banks are
exposed?
On Thanksgiving, investors around the World sold riskier assets, as the dollar stabilized and equities
sold off. The situation stabilized over the weekend as the United Arab Emirates central bank provides
additional liquidity to banks and branches to the Dubai area.
The Dollar Carry Trade may still be alive, but losing members, as copper and crude oil lag. Most
notably is the fact that crude oil has had a lower high in each of the last six weeks. Equities are
weakening in a totem pole from the SOX as weakest at the bottom to the Dow as strongest at the top.
Now there is a report that finally agrees with my theme first presented in April 2006. The
inspectors general of the US Treasury and Federal Reserve have criticized these banking regulators
for being too slow to react to risky lending and should have been on top of the growing overexposures
the commercial real estate loans. Bank examiners looked the other way instead of following their own
regulation with regard to exposures to C&D and CRE loans The FDIC has seized 124 banks so far in
2009, the most since 1992 leaving the Deposit Insurance Fund with an $8.2 billion deficit at the end of
the third quarter and an estimated $10.4 billion at the end of November.
Hotel Owners are falling behind on Commercial Real Estate Loans
Hotel operators are offering sweet deals to entice travelers, but occupancy rates are falling anyway.
Sources say that Hotel Loans are falling into delinquency faster than any other type of commercial real
estate debt. Exacerbating the problem is that new hotels started during the real estate boom are
flooding the market. In October 8.7% of hotel loans are delinquent, up from 1.5% year over year.
More help to prevent foreclosures
The Obama administration appears ready to increase pressures on mortgage companies to do more
to help homeowners prevent foreclosures to keep residents in their homes. The Mortgage Bankers
Association says that 14% of homeowners with mortgages were either delinquent or in foreclosure at
the end of September, a record level for the ninth straight quarter.
The Congressional Oversight Panel reported last month that foreclosures are threatening families who
took out conventional, fixed-rate mortgages with down payments of 10% to 20% on homes that would
have been within their means in a normal market. The Home Affordable Modification Program targeted
the housing crisis as it was in the beginning, but now the problem has spread to prime mortgages as
the unemployment rate rises.
Fannie Mae with its growing loan problems and with Conservatorship scheduled by law to begin to
unwind in 2010 makes any new program tougher to administer. Fannie has responded by tightening
lending standards requiring a 620 credit score or better with a 45% maximum of total debt to income.
My theme continues that “The Great Credit Crunch” continues and is intensifying!
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.

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Richard Suttmeier
Chief Market Strategist
www.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
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issues of my research.

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