Thank you Zero Hedge for a quick recap. Grandpa caught 2 minutes of her CNBC appearance while returning from a dental appointment. Sad commentary to prefer a dental appointment versus watching the dysfunctional equity market again ignore core fundamental economic data, no volume and the algo gamers going through their daily gyrations.
Meredith Whitney appeared on CNBC earlier and was about as bearish as ever, not only on financials, but on housing as well. In addition to saying that she expects the housing market to get worse in Q3 and Q4, the maven again reiterated the blatantly obvious, namely that all the recent earnings beats by financials have been an accounting sham driven by:
Provisioning for less future losses, by reducing NPLs (non-perfroming loans) in the current quarter, thus generating profits out of manipulated air (particularly relevant for HSBC's results yesterday, which were the main factor in pushing the market 25 points higher).
Increasingly more difficult for consumers to get loans. Not much of an issue - Obama will simply blame this on the previous regime.
And the glaringly obvious, i.e., that all European banks sit on bloated amounts of largely overvalued sovereign debt. Should another sovereign risk flaring appear (and it is Zero Hedge's belief that this will occur promptly, as soon as the European vacation season is over), it will be time to dig up the old skeletons of financial insolvency once again, only this time with EUR LIBOR and Euribor about 100% higher than where they were in May.
Full clip from one of the people who is still only semi-institutionalized:
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Meredith is always worth listening to; she was far ahead of most commentators in bearishness before the Lehman disaster hit. Today's housing numbers bear her out, and will continue to do so.
ReplyDeleteThe Euribor has been largely ignored except by ZH and a few others, but by fall I have a bad feeling that it'll become front page news. It's my guess that the Euribor is why the 10yr bond is as low as it is, given the rally in equities.