Meredith Whitney on CNBC: ‘I Haven’t Been This Bearish in a Year’; ‘S&P Expensive Across the Board’; Expects Next Leg Down in the Housing Market Soon



Nov. 16 (Bloomberg) — Meredith Whitney, the analyst who cut her rating on Goldman Sachs Group Inc. last month, said bank stocks are overvalued after rallying faster than the U.S. economy and share prices will fall to tangible book value.

“I haven’t been this bearish in a year,” Whitney, founder of Meredith Whitney Advisory Group LLC, said today in a CNBC television interview. “I think you can sit on cash for a little bit, because you have to wait for a leg down in valuations. The S&P is expensive across the board.”

The Standard and Poor’s 500 Index has rallied 64 percent since touching a 13-year low on March 9. The KBW Bank Index has more than doubled in that time.

“The banks that are asset-sensitive to consumer credit are not places you want to be,” Whitney said. Financial companies aren’t adequately capitalized and will need to raise more capital in the next year, she said.

Whitney said she expects a so-called double-dip recession in which the U.S. economy slumps again before recovering. She said bank stocks won’t fall as far as they did last year because of a smaller impact from fair-value accounting, which requires companies to value assets each quarter to reflect market prices.

To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net.

Last Updated: November 16, 2009 17:01 EST

Source: Bloomberg

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