Rising yields will hurt Housing and hence Main Street USA.

8/8/2019 Rising yields will hurt Housing and hence Main Street USA.

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Richard Suttmeier is the Chief Market Strategist at www.ValuEngine.com.ValuEngine is a fundamentally-based quant research firm in Newtown, PA. ValuEnginecovers over 7,000 stocks every day.

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

and commentary can be found at http://www.valuengine.com/nl/mainnl

December 8, 2010 Ris ing y ie lds w i l l hur t Housing and hence Main Str eet USA.

The yield on the 10-Year increased to 3.255 overnight and is up 92.1 basis points since testing

2.334 on October 8th. The 10-Year yield is above its 200-day simple moving average at 3.086 forthe first time since May 5th. QE2 HAS BEEN A TOTAL FAILURE SO FAR! Gold traded to a

new all time high at $1432.5, but closed below Mondays low for a Key Reversal Day. Crude oiltraded to a new 52-week high at $90.76 and closed below Mondays low for a Key Reversal DayThe euro closed below my quarterly pivot at 1.3318. The Dow Industrials flirted with confirminga Dow Theory Buy Signal with a close above its November 5th high at 11,444.08, but did not andnow we risk a double-top at 11,450 instead. A close above 1228.74 SPX would have violated the61.8% Fibonacci Retracement of the decline from October 2007 into March 2009, but that didnot happen either and the high was below this weeks risky level at 1236.20. This weeks otherrisky levels / pivots are 2662 NASDAQ, 5110 Transports, 758.57 Russell 2000 and 420.81 SOX.The Housing Market and the Health of Community Banks are the Keys to Economic Growth.

10-Year Note (3.158) My semiannual value level is 3.479 with weekly and daily pivots at 3.142 and3.039, and annual pivots at 2.999 and 2.813, and quarterly, semiannual and monthly risky levels at2.265, 2.249 and 1.949. Note that this yield is above its 200-day simple moving average.

Courtesy of Thomson / Reuters


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Comex Gold ($1399.0) Quarterly, semiannual and annual value levels are $1306.4, $1260.8,$1218.7 and $1115.2 with daily and weekly pivots at $1410.6 and $1400.5, and monthly risky level at

$1443.5. Note that Tuesday was a Key Reversal Day.


Nymex Crude Oil ($88.15) Semiannual, annual and monthly value levels are $83.94, $77.05 and$75.50 with a weekly pivot at $86.30, and daily, semiannual and annual risky levels at $89.70, $96.53

and $97.29. Note that Tuesday was a Key Reversal Day.



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The Euro (1.3264) Daily and monthly value levels are 1.3101 and 1.2500 with my quarterly pivot at1.3318, and Weekly and semiannual risky levels at 1.3473 and 1.4733.


Daily Dow: (11,359) Semiannual, annual, monthly and quarterly value levels are 10,558, 10,379,10,325 and 8,523 with annual, semiannual and daily pivots at 11,235, 11,296 and 11,309, and weeklyrisky level at 11,440. ValuEngine shows 15 of 16 sectors overvalued this morning.



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The Housing Market and the Health of Community Banks are the Keys to Economic Growth

The potential bottoming of the housing market faces several roadblocks led by the sale of foreclosed

properties. Because of the recent foreclosure freeze do to potential paperwork errors foreclosure saleplunged 25% in the third quarter and 31% year over year. However the average discounts ondistressed properties is larger versus normal home sales. This adversely affects property appraisals athe county level across the country.

Put into perspective sales of non-foreclosed properties fell 29% in the third quarter sequentially and31% year over year according to RealtyTrac. The average sale price of a depressed property was 32%lower than the non-depresses home sale in the third quarter.

The decline in sales of bank-owned properties known as Other Real Estate Owned (OREO) is in linewith these overall figures, but OREO at FDIC-Insured Financial Institutions increased $3.7 billion in ththird quarter extending the record to $53.2 billion, up 43.2% year over year. This puts considerablestress on the banking system, particularly community banks that are also saddled with about $1.43trillion in commercial real estate loans.

The foreclosure process has slowed as banks attempt to modify loans, and by banks slow to listforeclosure and OREO homes not wanting to overload the market with low-priced inventory.

The home builders want to build more new homes as their inventory is near record lows, butcommunity banks are reluctant to rebuild their books of Construction and Development Loans at atime when C&D Loans have been declining since 2007 and dropped another $28.9 billion in the thirdquarter, down 7.6% sequentially and 28.2% year over year.

Wall Street and the major too big to fail banks may have screwed up the mortgage market and hencehome owners while about half of the community banks became unmanageably overexposedcommercial real estate loans including construction and development loans. This double dilemma willtake years not quarters to unwind.

During the housing boom Main Street benefited with significant job growth at the community level.Without housing construction and improved balance sheets at community banks the US economy willcontinue to flounder with elevated unemployment rates. You cant grow the economy and create

jobs without the housing market and fixing the network of community banks.

Thats todays Four in Four. Have a great day.

Richard SuttmeierChief Market StrategistValuEngine.com, (800) 381-5576

Send your comments and questions to [email protected]. For more information on our products and services visitwww.ValuEngine.com

As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.com. I have daily, weekly, monthly, andquarterly newsletters available that track a variety of equity and other data parameters as well as my most up-to-date analysis of world markets. Mynewest products include a weekly ETF newsletter as well as the ValuTrader Model Portfolio newsletter. You can go HERE to review sample issues andfind out more about my research.

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Rising yields will hurt Housing and hence Main Street USA.

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