Video: Meredith Whitney on State Budgets, bank earnings
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Courtesy of CNBC:
Airtime: Tues. Sept. 28 2010 12:12 PM ET
The financial challenges states face could be the next systemic risk within the financial markets, according to Meredith Whitney, CEO of the Meredith Whitney Advisory Group.
Meredith Whitney: Housing set to fall again, S&P earnings impact…
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Meredith Whitney: “I am the most bearish I have been in a year”
Meredith Whitney agrees with MiM and thinks we will have a double dip. She echoed the sentiments of this morning’s post. “I don’t know what’s going on in the market right now because it makes no sense to me,” she said.
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Airtime Mon. Nov. 16 2009 1:11 PM ET
CNBC: Stocks are overvalued and the US economy is likely to fall back into a recession next year, well-known analyst Meredith Whitney told CNBC…The banking index has advanced some 136 percent but the sector may have been at least fairly valued, says Meredith Whitney, Meredith Whitney Advisory Group CEO. In a wide-ranging interview, Whitney, CEO of the Meredith Whitney Advisory Group, also said:
“I haven’t been this bearish in a year,” she said in a live interview. “I look at the board and every single stock from Tiffany to Bank of America to Caterpillar is up. But there is no fundamental rooting as to why these names are up—particularly in the consumer space.”
- She was disappointed that Fed Chairman Ben Bernanke didn’t spell out how the Federal Reserve planned to exit “the biggest Fed program to date, which is the mortgage-backed purchase program.” In a speech earlier Thursday, Bernanke said the central bank was watching the dollar’s decline but is likely to keep interest rates low.
- The US consumer was going through the biggest credit contraction ever—even bigger than that during the Great Depression. “That credit contraction is accelerating,” she said. “There’s nowhere to hide at this point.”
- The banking sector is not adequately capitalized and will need to raise more capital in the coming year.
- The residential real estate market is likely to worsen and remains a much bigger threat than the commercial property market. The government’s mortgage modification program won’t result in any major improvement in homeowners’ ability to stay above water, she added.
“I don’t know what’s going on in the market right now because it makes no sense to me,” she said.
“The scariest thing about the Fed’s program is that the money on the sidelines isn’t going to support that asset class,” she added. “So the trillion dollars of Fannie (Mae), Freddie (Mac) and mortgage-backed securities that the Fed is holding—there’s no substitute buyer there.”
Meredith Whitney on the new normal & Fed exit from MBS purchases, its impact on banks, housing…
Meredith Whitney - Photo: Bloomberg News
Update 2: Bloomberg on Whitney’s call:
The S&P 500 Financials Index slumped 1.5 percent, the most among 10 industries, after the House vote and as analyst Meredith Whitney said the biggest U.S. banks may face declining values on home-loan bonds with government backing as the Fed prepares to end its $1.25 trillion purchase program.
Bank of America Corp., JPMorgan Chase, Citigroup and Wells Fargo increased holdings of so-called agency mortgage-backed securities by 44 percent from the third quarter of 2008 to the second quarter of 2009, Whitney said in a note yesterday to investors. Those increases came as the Fed began buying securities backed by Fannie Mae, Freddie Mac and Ginnie Mae in an attempt to keep mortgage rates low and spur housing demand, she wrote.
JPMorgan fell 1.2 percent to $42.21, while Wells Fargo slid 3.1 percent to $26.82 and Citigroup lost 1.7 percent to $3.97.
Update: Ms Whitney wrote an excellent op ed in the WSJ last month outlining what we can expect in the financial sector and consumer going forward. Read it here. ‘Main Street represents the foundation of this country. Reviving it should take priority over any regulatory reform or systemic overhaul.’
Meredith Whitney is IMO the best bank analyst on the street bar none.
She put out two notes to clients last night, ABSOLUTE MUST READS:
1) Ain’t Gonna Happen, where she argues that “normalized” earnings for banks is a fallacy, that it’s more likely we will see protracted consumer deleveraging, fewer consumers who qualify for credit, and dramatic regulatory change, which will negatively impact earnings for a protracted period, and
2) The Great Exit: The Biggest Market & Bank Risk Over the Next Four Months, a long note on the importance of the Fed’s agency MBS purchase program, where she argues that uncertainty over when the program will end (now scheduled for end of Q1 2010), and who the substitute buyer for the Fed will be, means that “prices will go down meaningfully and rates will go up meaningfully.” She argues that it is possible the mortgage market will again shrink notably: “We believe this represents one of the larger risks to the banks and overall market over the next several months.”
Update:Market Mover: Meredith Whitney – Home Prices may fall another 25%…
Update: Second video clip courtesy CNBC, this has the money quote on the coming second leg down in home prices..
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“There’s no doubt that home prices go down dramatically from here,” Meredith Whitney, of the Whitney Advisory Group, told CNBC
Meredith Whitney is IMO the best financial analyst on the street…
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Home prices in the US could fall by another 25 percent because of high unemployment and another leg down will come for stocks, banking analyst Meredith Whitney told CNBC Thursday.
“No bank underwrote a loan with 10 percent unemployment on the horizon,” Whitney said. “I think there is no doubt that home prices will go down dramatically from here, it’s just a question of when.”
Local governments and states are chronically under-funded and “most states are under water,” adding to the problem of low private consumption, she said.
“If you look at the drivers for unemployment I don’t see that reversing very soon,” Whitney said.
If consumers were to decide to spend, “that would be a game-changer,” but it would be an unnatural thing to do in a recession, she said.
“A lot of themes are constant, which is the US consumer and the small business doesn’t have any credit, credit is still contracting,” Whitney said.
Consumer debt and consumer credit have dropped according to the latest figures which also show that people have been spending more from their debit cards than from their credit cards.
“Obviously that doesn’t bode well for spending,” Whitney said….
Weekly Jobless claims slightly lower, long term unemployment continues to drop as people lose bennies, trade deficit widens:
The number of U.S. workers filing new claims for jobless benefits fell last week to 550,000, according to a government report on Thursday that also showed the number of those collecting long-term aid tumbled.
Analysts polled by Reuters had expected initial claims to drop to 560,000, after reaching 576,000 the prior week, which had previously been reported as 570,000.Continued claims fell to 6.088 million in the week ended Aug. 29, the latest for which the data is available, from 6.247 million the prior week. That was the lowest level since the week ended April 4.
…Although the drop in jobless claims indicates a healthier labor market, “we haven’t seen hirings pick up yet. We might have the worst of the firings over but the companies are not confidant enough in hiring,” said John Canally, economist at LPL Financial in Boston.
Meanwhile, a separate report showed that the U.S. trade deficit widened the most in more than 10 years in July as imports grew a record 4.7 percent on resurgent U.S. demand for foreign cars, consumer goods and oil, a government report showed on Thursday.
The trade gap expanded 16.3 percent in July to $32.0 billion, the biggest month-to-month increase since February 1999….
Meredith Whitney- The “Great White Wash” of 1Q Bank Earnings – Bloomberg
Live! From New York, NY: Exclusive Interview with Meredith Whitney (Taking Stock)
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Moderate in the Middle 