Pros Say: Toxic Bill Could Be $200 Billion More
European banks rebounded sharply Monday as Barclays assured investors by saying it is not seeking capital and ING and BNP Paribas announced they would take state aid from their governments.
But experts tell CNBC the bad news is far from over, as toxic assets become more troublesome.
Potential for $200 Billion of Writedowns
BNP Paribas expects a fourth-quarter loss of around $1.8 billion, and announced plans to take part in second round of French state aid for banks. Ralph Silva from TowerGroup said he sees "potential writedowns of toxic assets around $200 billion" in the banking sector.
Toxic Assets Still Hiding
"There's a huge percentage of these toxic assets internationally, which we still don't know where they are," David Bennett, CEO of Association of Private Client Investment Managers and Stockbrokers, told CNBC.
Banking Crisis Continues
The banks still haven't killed off the financial crisis because they haven't shifted their bad assets, Philip Manduca from ECU Group told CNBC. "We continue to have endless horror, rather than the horrible end," he added.
Kick Starting the System
Getting the financial system working again has to the key focus for the market at the moment, Chris Tinker from ICAP told CNBC Monday. Debates over ownership can wait, he added.
The End of Monetary Policy?
Last year was the year of monetary policy and 2009 could be the year of fiscal policy, Peter Dixon from Commerzbank Corporates & Markets told CNBC Monday.
Bank on Long-Term View
The sharp stock movements of late, like Barclays' massive gain Monday, can be put down to "people playing roulette with banking stocks," according to Clive Hyman, CEO of Hyman Capital Services. He suggests people invest with a long-term view.
Hyman said to invest in banks on a 5-10 year horizon.
Philippe Gijsels is 'underweight' on banking stocks, but likes the pharmaceutical sector, as he sees M&A dominating the sector, and biotechnology, as he sees pharmas investing in the industry.
Basic resources and energy are also good places to put your money, according to Gijsels.
Oil to Remain in $40-Area for First Half of '09
The credit crunch and the energy crunch are two sides of the same coin due to gross misallocation of capital, according to Francisco Blanch, head of commodities research at Merrill Lynch. He sees the next 6-12 months being "very weak, very shaky."
Blanch sees oil trading around $43 a barrel in the first quarter; then rising to around $45 in the second quarter; and towards the end of the year trading around $60 a barrel.
Agriculture and gold are good investment plays for 2009, he told CNBC.
Stocks to Remain Range Bound for '09
The Dow is likely to trade in the 8,000 to 9,000 range for the whole year as it is a "period of unprecedented uncertainty in the equity market," Leo Tilman, president of L.M. Tilman & Co. said.
Credit is a good buy longer term, Tilman added.