Meredith Whitney | Rebel Traders - Stock Market and Economic Analysis

Meredith Whitney – Up to 2 Million Jobs Will be Lost in Next 12 Months

May 17, 2010 By Chuck

Meredith Whitney has a track record of calling the market like no other Wall Street Analyst in recent years. In many regards she does not fit the normal mold of a Wall Street analyst. She was ridiculed in 2007 for her calls on the balance sheet problems at the big banks, but in the end she was spot on.

Her thoughts on the overall market for the rest of the year …. “bleak”

Late Night Snacks

April 11, 2010 By Chuck

Late night Scooby snacks:

Germany says “not so fast” :

BERLIN -(Dow Jones)- The euro zone’s agreement Sunday about details on an aid plan for Greece must not be misunderstood as an actual decision to provide aid, but it does justify hopes that the country will be able to refinance its debt on its own, the German Finance Ministry said Sunday.

"This decision today was no decision on aid for Greece," Finance Ministry spokesman Michael Offer told Dow Jones Newswires. "But it was only about technical preconditions for aid by further specifying the decision of the heads of state and governments. We expect, we hope that Greece is now in a situation where it can continue to refinance itself on the capital markets, as previously."

[…] Offer said that if the aid plan were to be activated, this had to be preceded by a Greek request, followed by a separate decision process in which the heads of state and governments would "personally" and "unanimously" approve help, a recommendation by the European Commission and the European Central Bank for such aid as well as an assessment by the IMF, which would send a mission to Greece ahead of any aid package decision.

"There is a big step between what has happened today and what would happen if Greece would actually ask for this help," Offer said.[…] (Dow Jones)

Robert Shiller says “Don’t Bet the Farm on the Housing Recovery :

MUCH hope has been pinned on the recovery in home prices that began about a year ago. A long-lasting housing recovery might provide a balm to households, mortgage lenders and the entire United States economy. But will the recovery be sustained?

Alas, the evidence is equivocal at best.

The most obvious reason for hope is that, unlike stock prices, home prices tend to show a great deal of momentum. Correcting for seasonal effects, home prices as measured by the S.&P./Case-Shiller 10-City Home Price Index increased each month from June 1995 to April 2006, then decreased almost every month to May 2009. Since then, they have risen through January, the latest month for which data is available.

So, because home prices have been climbing of late, isn’t it plausible that they’ll keep doing so?

If only it were that simple.

Home price booms and busts do end, sometimes quite suddenly, as was the case for the boom of 1995 to 2006 and the bust of 2006 to 2009. Today, we need to worry about strong headwinds, as the government begins to withdraw its support of a still-troubled lending industry and as foreclosures are dumping millions of homes onto the market.

Consider some leading indicators. The National Association of Home Builders index of traffic of prospective home buyers measures the number of people who are just starting to think about buying. In the past, it has predicted market turning points: the index peaked in June 2005, 10 months before the 2006 peak in home prices, and bottomed in November 2008, six months before the 2009 bottom in prices.

The index’s current signals are negative. After peaking again in September 2009, it has been falling steadily, suggesting that home prices may have reached another downward turning point. […]

[…] THE question now is whether a strong case has been built for a new bull market since the home-price turning point in May 2009. Though there is no way to be precise, I don’t believe it has. […] (NY TIMES)

Earnings, Being Too Optimistic Carries Risk for Stocks

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The “Bear Angel” Strikes Again: Meredith Whitney Downgrades GS

October 13, 2009 By Chuck

Last July, Meredith Whitney, whom many had come to consider as a “bear angel” ever since she recognized first that Citigroup would cut its dividend in 2007, had trumpeted the doom of the last pack of bears that were resisting to the bullish onslaught. She had then made GS her only “buy” based on some light considerations on the money booked by selling corporate and government debt.

Will she be today the “Angel of Apocalypse” for the bullish crowds? She actually downgraded GS from “buy” to “neutral”, just as other analysts were making (a tad bit lately) GS their “buy”. The sanction was immediate: GS slided 3 $ lower.

I had heavily put Meredith under fire for her July “buy”, and I can again reaffirm that such switches in ratings have little to do with “real” analysis. If Meredith Whitney is basing herself on fundamentals, the situation has hardly changed between July and October. If anything, the economy has gotten better looking at the stats. However, losses in CRE are continuing to be an issue for most (if not all) banks and hence the analysts’ expectations that the profit would “triple” seem a bit unrealistic (unless of course, trading has been more profitable than usual). But these elements were already visible back in July to any analyst.

I talked then of “fallen angels”, but today, Meredith would excell as a partner of the “devil” GS in her uncanny ability to pull off such reversals.

Goldman Sachs Group Inc., the biggest U.S. securities firm before converting to a bank last year, was cut to â€œneutralâ€ by Meredith Whitney, as the analyst dropped her only â€œbuyâ€ recommendation.

Whitney, who correctly predicted in 2007 that Citigroup Inc. would cut its dividend, didnâ€™t update her price estimate on the shares in a summary note distributed to investors today. Further details on the downgrade werenâ€™t immediately available.

The New York-based analyst upgraded Goldman Sachs to â€œbuyâ€ on July 13, since when the stock has risen 34 percent, compared with a 29 percent increase for the Standard & Poorâ€™s 500 Investment Banking & Brokerage Index. The founder of Meredith Whitney Advisory Group LLC said on Sept. 10 that Goldman Sachs â€œstill has a lot of gas in its tank.â€

Goldman Sachs shares dropped 0.9 percent to $188.46 in German trading as of 10 a.m. in Frankfurt.

Goldman Sachs, which is due to report third-quarter results on Oct. 15, may say it earned $4.46 a share in the period, according to the report. The New York-based bank posted record earnings in the second quarter.

Goldman Sachsâ€™s profit probably almost tripled to $2.3 billion, according to the average estimate of analysts surveyed by Bloomberg. Revenue from trading has surged to a record as competitors including Morgan Stanley scaled back their riskiest bets.

Goldman Sachs has climbed 125 percent this year on the New York Stock Exchange, the largest increase among the biggest U.S. banks. The bank repaid $10 billion to the U.S. Treasury in June.

Goldman Sachs on Oct. 7 was rated â€œbuyâ€ in new coverage at Deutsche Bank AG, which said the firm may boost market share in investment banking and trading. A day earlier, the bank was upgraded to â€œoutperformâ€ from â€œunderperformâ€ by CLSA analyst Mike Mayo, who also said it may be a â€œlong-term market-share winner.â€

Meredith Whitney – Banking Problems Will Be Worse in 2009

March 17, 2009 By Chuck

Meredith Whitney is one of a very few analysts on Wall Street who foresaw the train wreck that began in late 2007. Meredith chimes in on her predictions for 2009.

Thank you Meredith for continuing to tell people the ‘real story’. Meredith is one of the few analysts to whom I have respect for, not because she is bearish… but because she is honest.

Filed Under: Market Updates Tagged With: Banks, Meredith Whitney

Rebel Traders - Stock Market and Economic Analysis