Markman: Bundle up for a deep credit freeze

Jon Markman paints a gloomy picture

“I hate to be the one to break the news, but here it is: Despite everything you’ve heard about how massive infusions of hot new money printed by the Federal Reserve and other central banks have thawed the chill in interbank lending, veteran credit analyst Brian Reynolds says credit markets have just experienced their worst two weeks of all time and show no signs of improvement. None.

Unless they improve soon, you’ll have to brace yourself for new lows in stocks as equity investors begin to anticipate the same severe recession that bondholders envision.”

“Credit analyst Reynolds figures that bears are going to wait for a nice, strong run-up in stocks this year, just as they did last autumn before pouncing again to short corporate and sovereign credit in the derivatives market, which in turn has the knock-on effect of punishing stock values. At the peak, as much as a third of corporate profits were related to debt or financing, and half of that will never come back — desperately disappointing bulls. To survive, investors will need to learn to leap nimbly out of the way once the onslaught begins.”

More on this topic (What's this?)
'Closing of the Gap' Moment Approaching
British Credit Crunch
Read more on 2007 Credit Crunch at Wikinvest

Jubak: Buy Commodity Stocks Now (Yes, Now)

Jubak’s 10/17 article highlights his favorite commodity stocks and his reason to bullish (long term) on certain commodity stocks. He’s bullish on:

TC (book value of $6.49/share), $17 price target for Dec 2009
CHK, target price of $39 a share by December 2009.
YARIY target price of $38 a share by December 2009.
PBR target price of $41 a share by December 2009
He’s currently looking to sell FCX and RIG.
He also says DVN, FSUMF, and UPL are holds.

Disclosures: I am long CHK and FSUMF

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