Meredith Whitney Talks Bears and Government Coddling on CNBC

whitney

Meredith Whitney said in a CNBC interview today that she thinks housing prices could fall 25% more, spending will fall, and the stock market will fall further. So much for green shoots. 24/7 Wall Street has more:

(Whitney) said that housing prices could fall another 25%. Here she sees a supply jam more than a vicious cycle as well as unemployment and exotic mortgage resets that makes the price drop inevitable. She thinks Florida has a massive leg down coming in another wave.

She also thinks spending is going to be lower. She said originally that she sees $2.7 trillion in credit being pulled out of the system by the end of 2010. So far she noted that we are $1.25 Trillion of the way there, but consumers are now de-leveraging and are trying to not carry credit card debt.

The banks are taking advantage of inflating assets and riding a steep yield curve that will bring a similar Q3 earnings to Q2 earnings. But the banks are now getting overvalued and she does not think a similar stock move is coming like we saw after the Q2 post-earnings run-ups.

And as far as the overall stock market and financial stocks, she’s bearish there too and is looking for another leg down in the stock market. She thinks there will be both positive and negative trading opportunities around the market dynamics. Her only single BUY rating in the banks is ating in the banks is Goldman Sachs Group Inc. (NYSE: GS) which she said “still has a lot of gas in its tank.”

It also doesn’t hurt that Goldman Sachs holds the key to the government’s revolving door. Here’s the first Whitney video on CNBC.

  • spencer

    Who is she and what are her credentials?

    Haven’t you seen the recent joke making the rounds that CNBC is looking for guest — their only qualification is that they can wear a suit.

  • Kathryn

    Meredith Whitney is the CEO of her own advising group. She has worked as a financial analyst at Oppenheimer, Wachovia Securities, and CIBC World Markets. She is known for her research on home price trends so when she forcasts, people listen. I don’t know what CNBC looks for in guests but Whitney has the qualifications that deem her information worthy enough to be news.