Meredith Whitney Talks Bears and Government Coddling on CNBC


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.

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Written by Drea Knufken

Drea Knufken

Currently, I create and execute content- and PR strategies for clients, including thought leadership and messaging. I also ghostwrite and produce press releases, white papers, case studies and other collateral.