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Two Ways: A Rising Tide of Credit Card Defaults


Strengthen your portfolio in good times and bad.


More consumers fell behind on credit card payments in March as lenders worked to cut their exposure to rising defaults. According to Reuters, Dan Adams, president of US information systems for Equifax (EFX), a leading credit bureau, said late payments on bank-issued credit cards rose 38% year-over-year. The rising delinquency rates forced lenders to cut down on credit, closing as many as 20 million accounts.

Not only were existing accounts closed, but fewer accounts were approved. The number of credit cards issued in January and February dropped 38% from the same period a year earlier. Adams also said higher instability existed in prime, rather than subprime, categories.

For more on the economy, see Professor John Mauldin's The Bear Rides Again?

From the Bull Pen: Equity markets seem to be ignoring the bad news. Fear has been overcome and regret seems to be the emotion of the day. But the legitimate case still lies with gold, which appears to be on the verge of breaking its downtrend. Those bullish can use the ETF (GLD); a tight sell stop can be set below $85.

From the Bear Cave: The S&P 500 closed slightly above 900 today, possibly a decent place to hedge with the some downside protection. One can consider the Double Short ETF (SDS). It's what Professor Jeff Macke is using. He's got a tight buy stop correlating with S&P 915.

Make it a great night, Minyans. See you in the morning.

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No positions in stocks mentioned.

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