Posts Tagged ‘Meredith Whitney’

Whitney Whips Up Wall Street as Bear in Heels: Alice Schroeder – Bloomberg

meredith whitney, bear in heelsMeredith Whitney has done it again, turning Wall Street against her with a contrarian call, this time on municipal bonds.

The analyst’s prediction for “50 to 100 sizable defaults” of U.S. municipal bonds totaling “hundreds of billions of dollars” could become her Big Wrong Call. If so, it will knock Whitney from a pedestal, to the satisfaction of her many critics.

She has staked her credibility on this forecast, broadcast Dec. 20 in an interview on CBS’s “60 Minutes.” Her summary of a 600-page report to clients prompted a National League of Cities analyst to say she possessed a “stunning lack of understanding.” Other critics called her prediction “ludicrous,” “irresponsible,” “damaging,” and “overreaching.”

There’s a huge gap between these descriptions and Whitney’s track record as an analyst. The chasm is so big that it is worth exploring. Something interesting is going unexamined or unexplained.

Continue here: Whitney Whips Up Wall Street as Bear in Heels: Alice Schroeder – Bloomberg.

Picture credit by Markusram at Flickr


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Sorry Charlie, Meredith Whitney Lives in a Free Country

Courtesy of Joshua M Brown, The Reformed Broker 

Charlie GasparinoI’ve always been a fan of Charlie Gasparino’s, I like his hard-nosed, old school journalism style and generally have agreed with a lot of his opinions over the years.  But his rant about Meredith Whitney’s municipal bond research is so far off the reservation, he may be in danger of losing his Indian name (Reports With Martinis).

Here’s Gasparino excoriating Whitney for being negative about the prospects for municipal fixed income investing in the Huffington Post:

And yet, as the municipal market is crashing on her prediction, with deals being pulled and slashed in size, with prices falling and taxpayers having to pay extra so cities and states can sell debt, Whitney is refusing to release the actual report that would tell us how she came to such a brash, and unprecedented prediction, on the grounds that her research is proprietary and for the use of the clients of her research firm only.

It’s about time Whitney came clean and released her report to the public so we can determine if it should be given so much credence; and if it shouldn’t, traders and investors can stop a possibly misguided prediction from causing further damage.

Hey Charlie, I don’t exactly agree with Whitney’s assertion that a Munigeddon is imminent, but she has the right to publish her research as publicly or as privately as she likes.  I’ll also note that muni bonds are suffering from limited liquidity as the mutual funds that make up a large portion of their ownership are seeing week after week of redemption.  Little Meredith Whitney may have a decent platform but she hardly moves hundreds of billions of dollars.

No, if anything, the blame here goes to the municipalities themselves for writing checks and making promises that their tax bases couldn’t cash.  The townsfolk won’t get fooled again – they are at the school board meetings and the Town Halls, they know there isn’t any money there.  Whitney’s call has simply been the most vocal expression of this general consensus.

Don’t kill the messenger.

Source:

Meredith Whitney Should Show Her Cards (Huffington Post)

Read Also:

Muni Misunderstandings (TRB)  


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Meredith Whitney Sees A 10% Drop In Wall Street Headcount And “Dramatic” Declines In Payouts In 18 Months

Meredith Whitney Sees A 10% Drop In Wall Street Headcount And "Dramatic" Declines In Payouts In 18 Months

Courtesy of Tyler Durden

And you were wondering why the SEC and certain politicians with extensive connections to the financial services lobby are starting to stir now that it is common knowledge that every single hedge fund and trading desk’s woes are a function of HFT run amok (which is exaggerated BS of course, but from Wall Street’s darling, HFT has now become the one thing everyone loves to hate, and blame their own underperformance on).

And as we suspected, there is a far more structural issue underlying the recent faux-move to restore confidence in markets, namely imminent pain for Wall Street headcounts… and bottom lines. According to Meredith Whitney, who had been relatively quite in recent weeks, Wall Street faces the departure of about 80,000 staffers, or 10% of all, within 18 months, not to mention a major drop in Wall Street compensation. The reason is the same as the one we pointed out earlier: slowing revenue growth, primarily due to the complete collapse in trading volumes, as computers have used their binary elbows to push everyone else out of the markets, and with Wall Street’s primary revenue model now being exclusively reliant on trading, this is equivalent to a partial extinction event as many trading firms will have to close. This also means that the New York City economy is facing another major solvency crisis as tax receipts are sure to plummet.

More from Bloomberg, citing Whitney:

“The key product drivers of Wall Street’s revenues and profits over the past decade have been in a structural decline over the past three years,” Whitney said in the report. “2010 marks the first year in many in which Wall Street-centric firms will go through structural changes.”

Barclays Plc, Credit Suisse Group AG and Royal Bank of Scotland Group Plc may lead a slowdown in hiring in Europe as the fixed-income trading boom fizzles out, recruiters said last month. Barclays Capital’s income from trading bonds and commodities fell 40 percent in the first half amid the sovereign debt crisis. Fixed-income, currencies and commodities trading was the biggest revenue contributor at investment banks from Deutsche Bank AG to Goldman Sachs Group Inc.

While regulatory reform, including higher capital requirements, will force some of these shifts, there will


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Monday Market Momentum (or Lack Thereof!)

It’s all about the Nikkie and the Fed this week.

I mentioned last week that we had to assume there is a 1,000-point tether between the Dow and the Nikkie and, in general, we can usually count on that relationship holding and we had several day (overnight) trades on EWJ that went well using that logic.  Today we should get a proper test of our connection as the two indexes are reaching their maximum gap once again with the Nikkei closing this morning at 9,572, 1,081-points below Friday’s Dow close at 10,653.  Europe seems to think it’s the Nikkei that needs to catch up to the Dow as the EU markets jumped 1.5% this morning – pretty much gapping up at the open and holding it through 8am, so far – that will lead us to go back in on EWJ for a catch-up trade if our markets make a similar move (with our target levels as easy indicators of a "real" rally).

Maybe Europe is right as the Yen was jammed all the way up to 85.8 to the dollar in our 3am trade and only fell back to 85.55 before being turned back up.  Both China indexes jumped 0.5% this morning as investors were happy with the Central Government’s decision to order 2,087 companies in 18 sectors to shut down obsolete plants in a decision aimed at streamlining industries that were polluting, energy-intensive and had excess capacity. 

This kind of makes me laugh at the talking heads on TV, whos think they are being clever when they call GM "Government Motors" as any fool reading the papers can see what real government intervention looks like – and the investors in China LOVE IT!  "This is very good news for the steel and cement sectors, as it will foster the development of these industries," said Chen Jinren at Huatai Securities.

Japan will close for a vacation next week and, of course, we have the FOMC rate decision tomorrow.  While no one is expecting a rate change, EVERYONE is now expecting some form of quantitative easing to pump more money into the US economy and we moved on and ignored Meredith Whitney on Friday afternoon – on the same day that we ignored some terrible jobs news:

China is not just managing their economy, they are managing ours as they risk their own growth in order to pull up the slack we were beginning to see…
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Meredith Whitney: The bottom line on financials

Meredith Whitney: The bottom line on financials

Courtesy of Prieur du Plessis 

A look at whether the data we’re seeing is a sign of a real turnaround in the financial sector, with Meredith Whitney, CEO of Meredith Whitney Advisory Group.


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Meredith Whitney Sees Bleak Second Half in Stock Market, Small Business Credit Crunch, Double Dip in Housing

Meredith Whitney Sees Bleak Second Half in Stock Market, Small Business Credit Crunch, Double Dip in Housing, Says European Banks in Worse Shape

meredith whitneyCourtesy of Mish

Meredith Whitney is concerned about financial reform that will punish banks just for the sake of doing something. This she says, will hamper small business lending right at a time state and local cutbacks will cost 1-2 million jobs.

The Wall Street Journal covers this in The Small Business Credit Crunch

Over the next 12 months, disappearing state and local government jobs will prove to be a meaningful headwind to an already fragile economic recovery. This is simply how the math shakes out. Collectively, over 40 states face hundreds of billions of dollars in budget gaps over the next two years, and 49 states are constitutionally required to balance their accounts annually. States will raise taxes, but higher taxes alone will not be enough to make up for the vast shortfall in state budgets. Accordingly, 42 states and the District of Columbia have already articulated plans to cut government jobs.

So the burden on the private sector to create jobs becomes that much more crucial. Just to maintain a steady level of unemployment, the private sector will have to create one million to two million jobs to offset government job losses.

Herein lies the challenge: Small businesses continue to struggle to gain access to credit and cannot hire in this environment.

Unless real focus is afforded to re-engaging small businesses in this country, we will have a tragic and dangerous unemployment level for an extended period of time. Small businesses fund themselves exactly the way consumers do, with credit cards and home equity lines. Over the past two years, more than $1.5 trillion in credit-card lines have been cut, and those cuts are increasing by the day. Due to dramatic declines in home values, home-equity lines as a funding option are effectively off the table. Proposed regulatory reform—specifically interest-rate caps and interchange fees—will merely exacerbate the cycle of credit contraction plaguing small businesses.

If banks are not allowed to effectively price for risk, they will not take the risk. Right now we need banks, and particularly community banks, more than ever to step in and provide liquidity to small businesses. Interest-rate caps and interchange fees will more likely drive consumer credit out of the market and many community banks out


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Voices of Reason in Sea of Insanity

Voices of Reason in Sea of Insanity

Courtesy of Mish

Amphibious assault vehicle makes a landing near Guam

Amidst all the hoopla, cheering, and insanity of throwing money at currencies thinking it will make them rise, here are a few voices of reason on my radar today.

John Hussman

Greek Debt and Backward Induction

…. The bottom line is that 1) aid from other European nations is the only thing that may prevent the markets from provoking an immediate default through an unwillingness to roll-over existing debt; 2) the aid to Greece is likely to turn out to be a non-recourse subsidy, throwing good money after bad and inducing higher inflationary pressures several years out than are already likely; 3) Greece appears unlikely to remain among euro-zone countries over the long-term; and 4) the backward induction of investors about these concerns may provoke weakened confidence about sovereign debt in the euro-area more generally. …

Looking at the current state of the world economy, the underlying reality remains little changed: there is more debt outstanding than is capable of being properly serviced. It’s certainly possible to issue government debt in order to bail out one borrower or another (and prevent their bondholders from taking a loss). However, this means that for every dollar of bad debt that should have been wiped off the books, the world economy is left with two – the initial dollar of debt that has been bailed out and must continue to be serviced, and an additional dollar of government debt that was issued to execute the bailout.

Notice also that the capital that is used to provide the bailout goes from the hands of savers into the hands of bondholders who made bad investments. We are not only allocating global savings to governments. We are further allocating global savings precisely to those who were the worst stewards of the world’s capital. From a productivity standpoint, this is a nightmare. New investment capital, properly allocated, is almost invariably more productive than existing investment, and is undoubtedly more productive than past bad investment. By effectively re-capitalizing bad stewards of capital, at the expense of good investments that could otherwise occur, the policy of bailouts does violence to long-term prospects for growth. Looking out to a future population that will increasingly rely on the productivity of a smaller set of younger workers (and foreign labor) in order to provide for an


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Whitney Cuts Goldman Sachs Earnings Estimate

Whitney Cuts Goldman Sachs Earnings Estimate

Courtesy of Jesse’s Café Américain

This took a bit of the edge off the rally led by financials and tech today.

Goldman is a strong bellwether for the US financial markets, since they make most of their earnings by ravaging all participants in them. While the fish can still swim, so the squid can feed. So like it or not, as Goldman goes, so the US equity market probably goes, at least in the short term.

It will take all their resources to keep the winning streak intact.

Barrons
GS: Whitney Cuts Q4, ‘10 Estimate
By Tiernan Ray

Joining the string of Goldman Sachs (GS) estimate cuts, Meredith Whitney Advisory Group today lowered its EPS estimate for Q4 from $6 to $5.50, though that’s still above the $5.42 average estimate.

For this year, Whitney lowered her estimate to $19.20 from $19.65, though that’s above the average $18.78 estimate.Previously: GS: Pali Cuts Estimates on TradingJoining the string of Goldman Sachs (GS) estimate cuts, Meredith Whitney Advisory Group today lowered the EPS estimate for Goldman’s Q4 from $6 to $5.50, though that’s still above the $5.42 average estimate.

For this year, Whitney lowered her estimate to $19.20 from $19.65, though that’s above the average $18.78 estimate.

 

 


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RICHARD RUSSELL EXPECTS THE NEXT DOWNTURN TO BE “VICIOUS”

RICHARD RUSSELL EXPECTS THE NEXT DOWNTURN TO BE “VICIOUS”

Courtesy of The Pragmatic Capitalist  

Falling Businessman

Despite the incredible 60% rally and chatter of a new secular bull market many investors remain highly skeptical of the equity markets.  David Rosenberg recently released his 10 reasons why the rally is over and Meredith Whitney says the market is again at risk of a downturn.  But there is perhaps no one more skeptical of the rally as the great Richard Russell, author of the Dow Theory Letters.

Russell continues to believe we are in a secular bear market and currently believes we could be in a topping process preceding a “vicious” downturn:

I haven’t liked the stock market. I can’t tell with any certainty at this time, but this bear market rally could be in the process of topping out. If it is, I think we’re in for a vicious collapse. Remember, rallies in a primary bear market are movements against the main force or tide of the market. In other words, during a rally, the bear forces have been held back. When a bear market rally breaks up, the market tends to make up for lost time. That means the declines tend to be rapid, violent and vicious. As I said, I can’t tell with certainty whether the advance from the March low is breathing its last. But if it is — watch out; it’s not going to be pretty.

Perhaps scariest facet of another potential leg down is the ramifications with regards to government and monetary policy.  Russell believes a substantial downturn below the March lows would mean the Fed policy has completely failed:

By the way, IF the advance from the March low is topping out, here are the implications. It would mean that all the Fed’s machinations and efforts to halt the deflation have gone to waste. Furthermore, if the March lows are violated (and nobody believes they will be) we will probably be in the final and most costly and frightening leg of this bear market.

While I agree with Russell that we are in the middle of a secular de-leveraging bear, I have a more difficult time believing that the market is about to revisit…
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Meredith Whitney: The government is “out of bullets”

Meredith Whitney: The government is "out of bullets"

Courtesy of Edward Harrison at Credit Writedowns

Composite of lightning bolts and bullets

I am not sure I buy Meredith Whitney’s assertion that the government is “out of bullets” in its quest to prop up the economy. It’s a matter of political will more than anything else. Nevertheless, I do agree with her basic premise in the CNBC video below that the financial sector is likely to see a more unfavourable economic climate in 2009 than it has done in 2009.

In particular, a looming crisis at the state and local government level, coupled with continued distress at regional and local banks will mean a deadly combination of higher taxes, fewer jobs and less credit for households and small businesses. Unless we see a change in the political climate in Washington, now oriented toward deficit reduction over jobs, we are likely to see a double-dip recession late in 2010 or 2011.

Whitney says “the component parts don’t add up” in addressing the Obama Administration’s conflicting rhetoric on jobs, stimulus and deficit reduction. I have said Barack Obama gets it because we have confirmation that he understands that raising taxes or cutting spending is what leads to a double dip recession.

I will accept that not everyone believes we should avoid recession if it means more government spending because of the enormous debt loads in the private sector and the unfunded liabilities in the public sector. Fair enough. I have my own doubts due to concerns about crony capitalism. That is an ideological debate about the role of government.

But in executing actual policy, I believe the President’s words and actions are at odds in part due to the political landscape and the wishes of the corporate interests to which he is beholden.

Witness the duelling headlines today where Joe Klein points out a speech with elbows that the President delivered today.  Michael Tomasky was equally impressed.

But, this was just a speech. When it comes to actual policy, Robert Reich was less impressed.

Barack Obama is trying once again for balance. On the one hand, he wants enough government spending to


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Phil's Favorites

Might consciousness and free will be the aces up our sleeves when it comes to competing with robots?

 

Might consciousness and free will be the aces up our sleeves when it comes to competing with robots?

Our advantage lies in incommensurables, and it’ll grow in importance. Franck V. on Unsplash

Courtesy of Allan McCay, University of Sydney

The rise of artificial intelligence has led to widespread concern about the role of humans in the workplaces of the future.

Indeed, Israeli historian, futurist and publishing sensation Yuval Noah Harari warns in his most recent book 21 Lessons for the 21st Century that there might one day be little need for human...



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Digital Currencies

Blockchain voting is vulnerable to hackers, software glitches and bad ID photos - among other problems

 

Blockchain voting is vulnerable to hackers, software glitches and bad ID photos – among other problems

How secure is online voting with blockchain technology? WhiteDragon/Shutterstock.com

Courtesy of Nir Kshetri, University of North Carolina – Greensboro

A developing technology called “blockchain” has gotten attention from election officials, startups and even Democratic presidential candidate Andrew Yang as a ...



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Lee's Free Thinking

Repo Market Bank Regulations and the Slings And Arrows of Outrageous Leverage

 

Repo Market Bank Regulations and the Slings And Arrows of Outrageous Leverage

Courtesy of 

Are repo market regulations really behind the money market’s problems? That’s what bankers and their hired mouthpieces are saying.

So I need to get a few things off my chest about this notion that post financial crash Dodd-Frank bank regulations are the cause of the current repo market problems.

It’s total bullsh*t. The bankers and their superleveraged hed...



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The Technical Traders

Daily Market Forecast and Trading Patterns

Courtesy of Technical Traders

CLICK HERE TO GET REAL TIME TRADE ALERTS!

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Zero Hedge

US Ambassador Tells Impeachment Panel Of Trump-Ukraine Quid Pro Quo

Courtesy of ZeroHedge View original post here.

A lightning-fast leak of closed-door testimony from US diplomat to Ukraine, William B. Taylor, reveals his ongoing belief that there was a quid pro quo between the Trump administration and Ukraine - who President Trump asked to investigate the country's role in the 2016 US election, as well as corruption allegations levied at Joe and Hunter Biden.

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Insider Scoop

Roku To Purchase Dataxu For $150M In Cash And Roku Shares

Courtesy of Benzinga

Roku, Inc. (NASDAQ: ROKU) has entered into an agreement to acquire Boston-based Dataxu, a demand-side platform, for $150 million in cash and Roku shares.

Dataxu provides marketers with an automated bidding and self-serve software to manage ad campaigns progr...



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Kimble Charting Solutions

Apple Bullish Breakout Suggesting Tech Follows In Its Path?

Courtesy of Chris Kimble

Is Apple sending a bullish message to the overall Tech market? Sure could be

Apple (AAPL) is working on a breakout above last year’s highs at (1), after creating a series of higher lows over the past year.

Tech ETF QQQ has been a similar-looking pattern to Apple over the past few months, as it is near old highs while creating higher lows.

Is Apple’s upside breakout suggesting that QQQ will follow in its footsteps and breakout?

Str...



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Chart School

Gold Stocks Review

Courtesy of Read the Ticker

Gold stocks are swinging back forth between the range, and a break out swing higher is due. Gold stocks are holding a near perfect Wyckoff accumulation pattern. All should get ready to play this sector. Yet we must recognize that gold stocks are a one of the most crazy rides at the stock market fair, so play very carefully.

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GDX PnF chart from within the video

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Important channels around the HUI.
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Biotech

The Big Pharma Takeover of Medical Cannabis

Reminder: We are available to chat with Members, comments are found below each post.

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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