Meredith Whitney: 'I Haven't Been This Bearish in a Year' 59 comments
November 16, 2009
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Bartiromo asks some good questions, including “Are banks adequately capitalized today?”
“No way,” says Whitney.
She adds: “I don’t know what’s going on in the market right now ‘cuz it makes no sense to me.” The fundamentals aren’t there.
(ht Alexis N.)
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This article has 59 comments:
CNBC headquarters
11/16/2009
15:00
Meredith Whitney: "I Haven't Been This Bearish in a Year"
The second that line exited her lips, the heavies at CNBC had sweat on their brow. Sheer terror ripped through a back boardroom.
A phone call to the programmers was placed.
"WE NEED DAMAGE CONTROL!!!!" was heard on the other side of the line. The voice was that of absolute panic.
"No problem, will do sir," was the reply.
Everyone received their individual instructions.............
This credit contraction is not over and will bite this economy.
And states are tanking even though the government lies about consumer spending. It has to be a lie, just look at the tax receipts of the states. Investors who are believing government numbers are foolish.
If people were really bullish -- they wouldn't give a crap what another talking head has to say... but everyone knows this rally is climbing on the back of a broken dollar and not much else. Fumes and lies. And now very extended. Small cap companies I follow keep putting out really bad results and are getting hammered. The divergences are already there. Just needs a push and over the waterfall this market goes.
Obama has already called for a jobs summit this December. This means to me that more stimulus is coming; I've read as much as another $250B. I am more in the John Mauldin camp that the second major downturn will not happen until 2011.
No new jobs, just life support at the expense of the middle class.
We seem to think all the bad stuff is behind us and it's just sweet profits as far as the eye can see. Yet, this country seems to be getting worst in almost every single way a country can be measured. If the government would just stop giving money away, we would find out REAL QUICK what shape we are really in.
seekingalpha.com/artic...
Yo, Maverta -- other smart and savvy investing women in the SA community -- and especially the moms -- do not appreciate comments like yours, please remove and repost without the personal attack.
Just because you appear to be long this market and hoping that this no basis overpriced government driven No Bad News is Bad news rally , and if it is bad we will just have the msnbc's of the world and Goldman & co. Spin the news favorably since July will keep on going forever
Is no reason to bash Ms. Whitney you should only be as smart as she is,
But don't heed her words just keep going long and I, vouch
you will lose every cent you have in this market and more
then it will be too late to remember what Ms. Whitney warned us all about this overpriced runaway market
running on empty on Nov. 16, 2009
On Nov 16 07:39 PM maverta wrote:
> either this chick hasn't had sex in months or she's pregnant. Did
> you see how washed out she looked today? and this is what moved the
> market? sorry, I'm not buying her skepticism. she has had one good
> call and now she's trying to make a career from it? I hope not.
ANd now while the market is acting drunk and CNBC types are using really tortured logic to prove how cheap the market is, and how great the US economy is going to be thanks to the largesse of the Federal Govt., Ms. Whitney once again looks all alone. But I think that she has the courage of her convictions, she doesn't get giddy, and I believe that she will be proved to be right.
Hell, a guy I have admired for years, Warren Buffet, sold his soul to Pres. Obama for some inside info.
Investors buy and hold and reinvest their dividends in good companies. You are buying the future of a worldwide consumerist society where billions of other people want exactly what you already have. Business will be good for the next forty years.
What to hear & learn more? Replay above until you understand economics.
We are toast and only the next election can save this country.
Good luck America
Capt Brian
The Lost Navigater
Meredith Whitney has NEVER been bullish.
After the market ran up 40% she came out with a "gutsy" call -- buy Goldman -- which she retracted about 2 months later.
What galls me about her is that she adds nothing. There is no research or data that she brings to the table that hasn't already been discussed on CNBC thousands of times before.
She and Roubini keep calling for clouds and storms ahead, and damn, sooner or later, we get one.
Frankly, I do not know who pays her for this stuff. She is clearly useless for determining an investment strategy -- unless you think the market will always go down.
On Nov 17 08:47 AM Ferdinand E. Banks wrote:
> Great article. Complete nonsense, but served up in only 5 lines.
I've been watching them since they were FNN & there are very few guests where I'll unmute the TV to listen....she is certainly one of them. I tend to only listen now to those guests that both warned us in 2007 about the problems, then turned bullish in spring/summer 2009. The perma-bears & perma-bulls really have no credit because they didn't help investors.
Ms. Whitney said early this summer that the banks would have some great earnings over the next few quarters. However, she added, they were not in a position to handle sustained high unemployment, which will hurt them in 2010.
The media picked up on the first line and ignored the second. Now that we are getting close to 2010, she is reminding everybody that they are not healthy.
Let's keep this in mind (something else the media will not tell you)....the stress tests modeled 10.3% unemployment by the end of 2010. If we're already at 10.2%, the average work week is not improving, and initial jobless claims are still above 500K/week, then shouldn't we assume that unemployment is going to be worse 13 months form now?
Without getting into anything else, shouldn't we assume that banks will have problems? They only raised enough capital to handle 10.3% unemployment.
Not time to short or panic yet, but we should be prepared. This year has been a nice gift & I'd hate for anybody to give much of that back by listening to the perma-bulls.
On Nov 17 08:47 AM capt Brian wrote:
> politicians do not run businesses that is why they are politicians,
> and running a country, (no one gets fired). [we should fire them
> all] is like running a business, simply take in more than you spend
> or you're going down.
>
> What to hear & learn more? Replay above until you understand
> economics.
>
> We are toast and only the next election can save this country.<br/>
>
> Good luck America
>
> Capt Brian
>
> The Lost Navigater
Observations first:
MW is certainly right that the banks are under-capitalized. Her need to comment on the market as being overbought - I excuse as a venting of her frustration of trumped-up GDP growth based on government spending while personal income is dropping. GDP should be reported as ex-government stimulus.
Check the two real numbers [no seasonal adjustments] we get - unemployment claims and tax receipts. Everything else is suspect. Does anyone think that the seasonal adjustments for temp help this holiday season makes any sense?
Watch the layoffs once the January sales are over. Watch the stores close as no-one is going to lease for 9 months waiting for the next 'profiy' season.
If the FED has to have at least 4 say [including the chairman and vice-chair] that we are NOT in an asset bubble - then we ARE in an asset bubble.
China cannot support 'internal' spending anymore and exports are not cutting it. A one-point rise in the DXY will bring on panic.
The ride has been great and when GS says thing are no longer good [after reversing their positions], the initial down move will be swift.
Now for the reality of what is to come:
Time to mark-to-market those mortgage and REO 'assets'
you cannot kick the can down the road forever.
The banks are really scared and know the day of reckoning is near - not from commercial [which of course will collapse many small banks], but good ol' residential. The Alt-A onslaught will dwarf sub-prime and will last into 2012.
At some point the dam breaks and the banks will be forced to dump the houses they are holding onto the market. The assets begin to physically deteriorate beyond what the pencil can hide. And then, it is too late.
Markets go up and markets go down - it's time for some down.
All said IMHO
On Nov 16 09:29 PM yellowhoard wrote:
> 250 billion for overpaid state employees.
>
> No new jobs, just life support at the expense of the middle class.
On Nov 16 07:39 PM maverta wrote:
> either this chick hasn't had sex in months or she's pregnant. did
> you see how washed out she looked today? and this is what moved the
> market? sorry, I'm not buying her skepticism. she has had one good
> call and now she's trying to make a career from it? I hope not.
Kidding, I think, but it does make me wonder...when will come the tipping point of mass consumer purchasing on online sites that will cause a gov't rush to sales tax all those purchases?
As states go belly-up, I see it coming.
On Nov 16 08:14 PM Gary A wrote:
> No one else is going to buy these mortgage backed securities. There
> is no other market. Bill Gross is getting out of them.
>
> This credit contraction is not over and will bite this economy.<br/>
>
> And states are tanking even though the government lies about consumer
> spending. It has to be a lie, just look at the tax receipts of the
> states. Investors who are believing government numbers are foolish.
Before you consider your post on options, you consider the post on which stud to use in your ears, and how many collars would be deemed appropriate around your neck, I need no advice or advanced warning on the prospects of security from a source such as this. First consider the weave of the sack to put over your head, you need a coarser weave if you expect to breathe.
That was the middle of July when she thought GS was cheap. Only $25 a share later she's ready to throw it under the bus. Same goes for BAC. She missed the big runup after March where she continually said financials would take years to recover, then tried to get on board in July after she got burned and now is trying to get in front of any possible correction so she can say I told you so. What exactly has changed in the past seven months to have her jumping from one extreme to the other and then back again? She's just trying to cover her as..... I expect if nothing dramatic happens in the next few weeks and bank earnings jump again in the 4th qtr, she'll be out with another bullish pronouncement. Make up your mind, woman.
Interesting and accurate are the Roubini comments about major carry trades using US currency and how the banks and brokerages are back in the casino pissing away TARP money. The fact that there are few fundamentals to sustain these equity prices does not seem to bother them, that is the prop here. They have our money and are speculating on stocks and commodities, who will be the last one out of the room when the dollar rebounds.
Nouriel Roubini - definetely worth a read.
On Nov 16 10:29 PM hobart_the_dish_guy wrote:
> Meridith has been bearish for the past 400 points on the Dow. That's
> fine, but apparently she doesn't quite understand the market forces
> that have caused/allowed this. While she has been right in the past,
> so have a lot of other market "guru's".
loser
Obscene opportunists, who mask as patriots but who have been purchased, do not love this country. They love what they can pry out of it. The average American is learning the lesson they teach, and we are unraveling as a great nation.
On Nov 17 10:32 AM keithofrpi wrote:
> We're all getting jittery a little early here. I think it's based
> primarily on a faulty analogy to the crash of the thirties, when
> there were several severe legs down. But while the economic management
> has not been perfect, it has certainly avoided the major mistakes
> of the Depression. That pattern won't be repeated, at least not for
> the same reasons. A second reason for premature jitters is simply
> our modern impatience: with instant internet and 24/7 news, we expect
> everything to happen yesterday. When it doesn't, doom seems to loom.
> There are plenty of signs that the real economy has slowed or stopped
> declining. Consumers' debt has massively improved, and the normal
> cycle of replacement is stabilizing demand. With enormous innovation
> continuing to appear, there is every reason to think things will
> gradually improve from here. Is the market ahead of that? Not if
> we take improved profitability into account along with revenues.
> As for the financial sector, I suspect problems are working off faster
> than is publicly recognized, and credit is gradually becoming more
> available.
quite an eye opener vs the hype....
1) If proper asset valuations were applied to banks today, it is likely that very large numbers of Banks would be Bankrupt!
2) Forgetting the Wall Street/Establishment "smoke & mirrors", where & how is the consumer going to rebound on Main Street?
3) Have enough Mum & Dad investors been sucked in yet?
Who has the most to lose if the real estate market goes down? Who owns Fannie Mae, Freddiee Mack, and HUD? 95% of all mortgage initiations in this last year were supported by the gov't, including 3.5% interest loans.
Don't tell me the gov't is not manipulating and supporting the real estate market as they have the most to lose, along with Buffett.
On Nov 16 10:30 PM E Nuff Sed wrote:
> Meridith says sell the banks; John Paulson is buying copious amounts
> of Citi? What to do?
Many times the two ideas can't co-exist.
It is plain equity is dead money. Were this not true would Buffett sink such a big stake into a hugely capital-intensive railroad? This capital preservation play screams loud and clear equity is grossly overvalued and soon might not buy much of anything possessing sure cash-generating value. That Buffett could not wait for the next shoe to fall speaks of fear his BRKA would not possess the same currency as now.
Something like Whitney, I have never been this bearish.
On Nov 16 10:36 PM Dan Sanders wrote:
> In reply to maverta's comment
> Just because you appear to be long this market and hoping that this
> no basis overpriced government driven No Bad News is Bad news rally
> , and if it is bad we will just have the msnbc's of the world and
> Goldman & co. Spin the news favorably since July will keep on
> going forever
> Is no reason to bash Ms. Whitney you should only be as smart as she
> is,
> But don't heed her words just keep going long and I, vouch
> you will lose every cent you have in this market and more
> then it will be too late to remember what Ms. Whitney warned us all
> about this overpriced runaway market
> running on empty on Nov. 16, 2009