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Don't Let the FDIC's Quarterly Profile Fly Under the Radar


This is the balance sheet for the US economy and is a leading indicator for GDP growth.

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.

FDIC's Third-Quarter Banking Profile Is Released Today at 10 a.m.

The economic calendar shows several economic reports out today, including: Preliminary Real GDP for the third quarter of 2009, which should be revised downward from 3.5% in last month's advanced reading. Some say the downside revision could be below 3%, which will not be expected by the market.

The Case / Shiller home price index should continue to show a year-over-year decline, but sequential increases should continue. This data is for September, when the first-time home buyer $8,000 tax credit was in full swing.

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On Monday, Existing Home Sales was up 10.1% to 6.1 million units. This data was bulged with 33% from first-time home buyers and 30% from distressed sales. This takes demand from new home sales, which has been a drag on the home builders.

Consumer Confidence for November should remain under 50, but even if it's not it will be well below 90 to 120, which is the neutral zone for confidence.

Not on anyone's economic calendar is the most important release -- the third-quarter 2009 FDIC Quarterly Banking Profile, which will be my leading indicator to justify my call that "The Great Credit Crunch" will continue through 2011 and into 2012. (See also The Great Credit Crunch Is Deepening)

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The FDIC Quarterly Banking Profile is the most important data I study, as this is the balance sheet for the US economy and is a leading indicator for GDP growth.

The NABE Says "The Great Recession Is Over"

I have to disagree with this group of prominent economists once again. I say "The Great Credit Crunch" will continue though 2011 maybe 2012.

The NABE says that GDP will grow by 2.9% in 2010. By the end of 2010 it expects GDP to return to its all-time high of $14.55 trillion. Not with deteriorating assets in the banking system.

The NABE says job losses will bottom out in the first quarter of 2010. Not with continued layoffs that we seem to hear about or read about recently.

The NABE represents Wall Street firms. Wall Street still doesn't realize the problems of Main Street.

St. Louis Fed Chief James Bullard Wants the Fed to Extend Quantitative Easing

He's pressing the law concerning Conservatorship of Fannie Mae (FNM) and Freddie Mac (FRE).

Conservatorship is supposed to begin to unwind the portfolios of the GSEs in 2010, and the Fed has already pushed the law by extending the purchase of mortgages and debt of Fannie and Freddie to the end of the first quarter of 2010.

I guess this is just another law our banking regulators choose to ignore.

(See also Two Ways To Play: Bullard Hints at More Fed Accommodation)

People's United Financial to Acquire Financial Federal Corp

People's United (PBCT) will pay $738 million for Financial Federal, which is not an FDIC-insured financial institution.

Perhaps this is a new trend, where community and regional banks buy financial companies, such as credit unions, to dilute bad assets and place the purchased deposits under the guarantee of the FDIC. I have not seen a statement from the FDIC on this transaction.
No positions in stocks mentioned.

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