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Maria's Market Message 20 Nov 2009
CNBC's Maria Bartiromo discusses the day's top business and financial news, and looks ahead to tomorrow's Closing Bell.

20 Nov 2009

Legendary baseball manager Joe Torre on the latest New York Yankees' World Championship and turning a challenging childhood experience into a thriving philanthropy.

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Meredith Whitney: Turns Bearish

Published: Monday, 16 Nov 2009 | 5:28 PM ET

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By: Lulu Chiang
CNBC Senior Producer

cnbc.com
Meredith Whitney

Meredith Whitney is making headlines: She has not been this bearish in a year!

Whitney was the first to call the bubble in financial stocks. And then she predicted the stock market rally.

But now Whitney is starting to turn negative again.

Whitney said on today's Closing Bell in an interview with Maria Bartiromo that there's no fundamental reason behind why stocks like Tiffany [TIF Loading... () ], Bank of America [BAC Loading... () ] and Caterpillar [CAT Loading... () ] are up, especially in the consumer space.

There's also been a real contraction in consumer credit. Whitney hasn't seen this much consumer credit contraction, "ever." Whitney said "in 1990, '91, yes, you had the market provide so am liquidity to the consumers, the consumer had more liquidity during that time. Now the consumer has actually a lot less liquidity. $1.5 trillion of credit lines on credit cards have been pulled from the system and that credit contraction is reaccelerating."

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Whitney said "folks that are hoping for a robust consumer market, (consumer Christmas) are going to be disappointed. There's nowhere to hide at this point."

Whitney: Banks Need More Capital

The Fed and Treasury have to get the banks to pay back TARP. The banks are going to raise capital again. And then the states will have their hands out. Because 44, 48 states are under funded and progressively getting more under funded.

BARTIROMO: Let me get your take really on the capital of the banking system right now. So you're expecting that we will see them do another round of capital raises. Do you think that the sector is Adequately capitalized today?

WHITNEY: No way.

BARTIROMO: No way?

WHITNEY: No way.

Wow!

Not Banking on Banking Stocks

BARTIROMO: You know, you came out with a call on Goldman Sachs [GS Loading... () ] a while back. Would you be shorting the whole group?

WHITNEY: I think that the call this year, the trade this year has been short the regional banks and go long the capital markets banks. And that's worse, because the government's behind the capital markets providing unprecedented liquidity, buying these agency mortgage-backed securities, so the banks are buying them. It provides like, I say if the lifeguard's on duty people will get in the pool, if the lifeguard is going to go off duty at some point, we just don't know.

The capital markets are going to be down.

Look at the equity markets are down.

I think now you can start to see the big banks converge closer to the regional banks. So the trade now is at least, reducing waiting in the large cap banks. All this said, I don't know sense to me because it's rallying. And there's no root in fundamentals. There is so much money on the sidelines people say.

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