Mike Malone, equity sales and trading analyst for Cowen, told CNBC’s “Morning Call” that troubles in the sub-prime mortgage sector are unlikely spread to the broader economy.
“I think it’s becoming increasingly clear that the risks are somewhat contained,” Malone said Wednesday. “I think we’ve seen a lot of stabilization recently in the credit markets. We’ve also seen stabilization in the currency markets. I think investors right now are getting increasingly comfortable with that situation and it will not spread to the broader economy.”
He saw little danger that sub-prime woes would affect the liquidity of the mortgage market as a whole.
“Thus far, I think the delinquencies and foreclosures have been limited to the sub-prime market,” Malone said. “I think that could weigh on the lower end of the housing market.”
David Joy, chief market strategist for RiverSource Investments, agreed and added, “I think we’ll be beyond it by the middle of the year.”