Charles Peabody predicts 1999 Banking Crash,
Hello Dale,
I noticed your thread and thought I would put up this email that I sent out to Le Metropole members as the subject matter may be of real interest to some on this thread. The text itself is too much to put up.
Charles Peabody is often quoted by Alan Abelson, Editor in Chief of Barrons. To call for a 60 to 80% move down in the bank shares in 1999 is quite a call. A very dramatic one. Charles Peabody has the reputation as one of the top banking analysts on Wall Street.
Bill
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Le Metropole members,
Charles Peabody has served commentary at the Hemingway
Table.
We have had this piece for a couple of days and have been
trying to get the graphs and charts to come up properly on
the Hemingway Table. We are still working at it and I will
notify you if we are able to do so. I ask your indulgence on
this one.
His analysis is too important to hold back any longer. On Friday,
the bond market broke down completely. You will note in Charles'
commentary that only he, and one other economist identified in
a Wall Street Journal poll are predicting a long term interest
rate with a 6% handle on it. The other interest rate calls are
benign.
This is compelling work. Charles has long held the view that Asia
would go into a long and pronounced recession as a result of their
market manipulations. He now expects credit dislocations, or
defaults,in Asia that will come back to haunt U.S. institutions.
He sees these problems spreading to Latin America.
Nobody sifts through banking reports like Charles Peabody. He has
discovered significant information that may affect the market place
very soon. The major banks all have projections for the future that
are based on short and long term interest rates going the same way.
If they do not do that, Charles sees big banking problems on the horizon. They are not prepared for what Charles calls a
"non-parallel" shift in the yield curve. In other words our
Fed will step on the money juice to keep rates down, but long rates will go up. This has now begun in earnest. You know it is Midas' very strong held belief that their is a goon squad out there trying to keep the gold price down. It is led by Goldman Sachs. It did not go unnoticed to Charles that Goldman's Abby Cohen, noted Wall Street mega bull, shifted 2% of her portfolio from stocks to bonds. Bonds, not cash. It did get some heavy publicity.
The wagons are being circled. The Gitic default problem in the fall in China now takes center stage Tuesday in that part of the world. Alan Greenspan heads for Hong Kong today for previously scheduled
banking meetings. But, on Monday and Tuesday he is having hurried
banking meetings with all the Chinese. Would it surprise you if I
told you the big buyers of long term bonds on Friday were the
Central Bank of China and the Saudi Arabian Monetary Authority.
Midas told you on Thursday that Goldman Sachs and JP Morgan are
heading up a crises risk management team. Why are announcing this
now and doing so now? The stock market suggests all is blissful.
We here Credit Suisse is on the ropes. Brazil is in the news as one
of its states has defaulted.
As result of all of this, PEABODY PREDICTS the US banks will go down
60 to 80% in value. We will have a liquidity crash. The risk spreads
have not come in and that is what that is telling you.
Interestingly enough - Charles is loading up on gold stocks. The
last time he did so was in 1993. If you are a long time Jim Grant
fan, you know that because Jim Grant wrote Charles up then as I
am doing for you now.
Quick access:
lemetropolecafe.com
Have a nice weekend and all the best,
Bill Murphy
Le Patron
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