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Geithner Faces Heat, But the Recession Continues


He says the US is recovering. I respectfully disagree.

Editor's Note: This article was written by Richard Suttmeier, chief market strategist at, which is a fundamentally-based quant research firm in Princeton, New Jersey, that covers more than 5,000 stocks every day.

The Economy Is in Recession As Long As Jobless Claims Are Above 350,000

You remember how I tracked the 350,000 threshold in mid-2008? We were already in recession then.

Even Federal Reserve Chairman Ben Bernanke admits that the economy is still losing jobs, albeit at a slower pace, but not at a pace to raise the federal funds rate. He repeatedly says that rates will stay low for an extended period, which admits that unemployment will remain high for an extended period.

Former Fed Chairman Alan Greenspan says that several months of 100,000 job growth in non-farm payrolls must occur before the unemployment rate peaks.

Comments From Treasury Secretary Geithner

Our Treasury Secretary told the Joint Economic Committee that the US is recovering from the worst financial and economic crisis in generations. He indicated that after an extended and painful contraction, GDP grew at an annualized rate of 3.5% in the third quarter. He expects this to be the beginning of a trend with growth in the fourth quarter and in 2010. I respectfully disagree.

I agree with Republican Congressman Kevin Brady, who wants Geithner to resign. As New York Fed President, Geithner ran the Federal Open Market Trading Desk, which has the primary dealers as contra-party clients.

The New York Fed thus monitors the financials of the primary dealers on a daily basis. Here are some problems Geithner missed among the primary dealers: Countrywide, Bear Stearns, Lehman, Merrill Lynch, etc.

Tuesday's release of the FDIC's third-quarter Quarterly Banking Profile will give me the reasons that I disagree with the Treasury Secretary.

Mortgage Delinquencies and Foreclosures on the Rise

Economic strength should be questioned as prime mortgages sink into foreclosure. Because of rising unemployment, prime mortgage in foreclosure accounts for 33% of all new foreclosures in the third quarter, up from 21% in the third quarter of 2008.

The percentage of all mortgage holders either delinquent or in foreclosure reached a record high for the ninth consecutive quarter. The delinquency rate hit 9.64% in the third quarter versus 9.24% in the second quarter and 6.99% in the third quarter of 2008. For FHA-backed loans, 18% are at least one payment late or in foreclosure.

Treasury to Sell $118 Billion in Notes Next Week

The US Treasury will sell $44 billion in 2-year notes on Monday, $42 billion in 5-year notes on Tuesday, and $32 billion in 7-year notes on Wednesday.

The daily chart of The Dow is overbought with the 21-day simple moving average at 10,070.

The daily chart of NASDAQ with the 21-day and 50-day converged at 2129 and 2126.

The daily chart for Transports is overbought with the triple top at 4050 and the 21-day and 50-day in negative formation at 3846 and 3883.

The daily chart for the Russell 2000 shows the double top at 624 / 625 and the 21-day and 50-day in a negative configuration at 585 and 599.

The SOX shows the double top at 337 with the21-day and 50-day also negative at 310.78 and 318.04.

Send me your comments and questions to

That's today's Four in Four. Have a great day.

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No positions in stocks mentioned.

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