Whitney: “I haven’t been this bearish in a year”

November 16, 2009

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.)

4 comments

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I think cash is not a good place to be, so I can wait for a pull back i have a 34 year time horizon before I retire I am not selling now.

Budget insiders see worse ahead in Calif., Mich.
By Daniel C. Vock, Stateline.org Staff Writer

Two of the states hit hardest by the Great Recession—California and Michigan—are bracing for an even tougher time making ends meet next year, putting big spending cuts or outright elimination of some services on the table, top budget officials from both states said Friday (Nov. 13).
Michael Genest, the budget director for California Gov. Arnold Schwarzenegger (R), said his state faces a budget gap next year of at least $7 billion—and likely more—after eliminating $60 billion in red ink this year. The “nightmare scenario” for his state is that continuing revenue drops will spell severe impacts on government services or taxpayers in California, Genest said at an event sponsored by the Pew Center on the States.
Mitchell Bean, director of the nonpartisan Michigan House Fiscal Agency, said Gov. Jennifer Granholm (D) already has warned state agencies to prepare for 20 percent cuts next year.
Bean said Michigan may see more local governments becoming insolvent. In Michigan, that means state-appointed officials essentially take over the municipality’s finances.
“Unless something changes, it (the state’s budget situation) will get worse every year. There is no end in sight, even in a recovery. It is a structural problem,” he said.

Posted by action jackson | Report as abusive

The market certainly does make no sense. The S&P 500 price/earnings ratio has been, according to several published charts and others recently, at 140, three times its prior all-time high of 45, just before the docom crash, and five timss its previous all-time high of 30 just before the 1929 crash. Either the published numbers are wrong, or something totally unprecedented is happening. Why this oddity has been little remarked upon is almost as strange as the number itself.

The traditional way of thinking about the P/E ratio would say that unless we are certain there is going to be a complete and very rapid recovery (is anyone confident of that with rapidly-rising unemployment, negative equity in much of the housing stock and over 100 bank failures this year?) we would be well-advised to worry that stocks might be ten times over-valued and therefore sunject to a 90% crash.

The market, however, doesn’t agree with this at all. The only explanation this ignoramus can come up with is that the possessors of the multi-trillion-dollar bailouts, unconcerned about earnings because of the low interest rates available to them, and unconcerned about risk because of federal guarantees,have been buying with abandon at the expense of the taxpayers rather than investing in something more useful to the public.

Does someone have a better-informed explanation?

Nick Arguimbau

Posted by Nicholas Arguimbau | Report as abusive

Here’s what I don’t understand… the banks own VERY little of what they service… most everything I’m seeing that’s in default is GSE or FHA… how much of the mortgage market is owned/controlled/backed by the federal government now?

And with the HAMP incentives, Fannie and Freddie buying most of what they originate(d), and the Fed buying their toxic loans, federal takeover of the GSE’s, billions in TARP stimulus, 4 lenders now control over 80% of all new originations- which are virtually all Fannie/Freddie/FHA, they get reimbursed in full for advances once a property sells REO… and they still can’t make a buck?

They’ve been given EVERY advantage and they still can’t function…

What, exactly, do they own?

Posted by robert | Report as abusive