Things are pretty quiet news wise today so I will be brief. I wanted to pass along some research that I found on projected credit card debt defaults in 2009:
As you can see, credit card defaults are expected to soar next year. This will create a nice shorting opportunity down the road on financials who are extremely reliant on credit debt in terms of revenue.
Based on the data above, Capital One(COF), Discovery(DFS) and Amex(AXP) all look very juicy on the short side as the recession deepens because they all heavily rely on credit card revenue.
However, now is not the time to put the shorts on because you are fighting the Fed and its balance sheet. I expect many of these stocks to rise in the near term based on the hopes of a credit card bailout combined with the "bubbleheads" who believe the recession is almost over.
This will create an excellent shorting opportunity in 2009 as the credit card defaults worsen throughout the year. I will be buying PUTS on these early next year. The VIX is rapidly dropping close to levels where PUTS are worth buying again.
Some food for thought.
I hope everyone has a great Sunday!