Wednesday: As the state of financials continues to worry the markets, Fed Chairman Ben Bernanke said the U.S. has no plans to nationalize Citigroup. Wealthy Americans are suing UBS to keep their names secret (as a $31 billion UBS order went wrong, reportedly) and Congress is considering a housing bill that'd let judges erase mortgage debt. Experts told CNBC that America needs more infrastructure in the stimulus bill — and that there won't be a recovery until housing improves.
Economic Recovery Drowned Out by 'Feedback'
RBS Greenwich Capital's Michele Girard said the system is trapped in a "feedback loop" — where banks started the problem, it hurt the economy, and now the banks can't recover because the economy is hurting. It was housing, it now is jobs, and jobs must stabilize before the housing problem can be solved. Progress will only be made when people want to buy homes again.
More Stimulus Should've Gone to Infrastructure
Wall Street legend Felix Rohatyn — who helped save NYC from bankruptcy in the 1970s — said the things that worked then can work now, including closer co-operation between business and labor, and full disclosure to citizens and shareholders. He wanted a larger portion of the stimulus package to go to infrastructure improvement; the American Society of Civil Engineers says we are $2.2 trillion behind in that realm. We must disabuse ourselves of the notion that government can only do bad things: Look at everything from the Louisiana Purchase to Pres. Eisenhower's interstate highway system, said Rohatyn.
(Contd.)
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Hey, Joe CEO: We Need a Pep Talk From You, Too
Subodh Kumar said the calls for "clarity" cannot be restricted to the government, which is already very visible, as are central banks; but "the corporate chieftains are too invisible." It's not enough just to criticize government and central banks; CEOs must come forward and show some confidence, as well. They don't need to lie; they just need to say things like, "This is what we're doing to improve efficiency."
Health Care, Tech, Energy Stocks Better Than Banks
BlackRock's Bob Doll said he remains on the sidelines when it comes to investing in bank stocks: He owns JPMorgan Chase, but not Citigroup or Bank of America. Health care and technology are much better bets; so are energy stocks. Tech companies have much cleaner balance sheets and freer cash flow than others — a legacy of the bursting of the tech bubble nearly a decade ago, when the survivors became much more conservative.
HMOs have outperformed the market, despite getting slammed this week. Pharma and medical information and equipment companies also have more room for cost-cutting. (Click to see Doll's favorite HMO stock — in the CNBC Stock Blog.)
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