Brown leads in with the sexist subtitle:
Our girl Meredith, bearish as ever, seems to have snoozed through the past twelve months.
I have to condemn this sort of thing – calling a woman who is almost 40 years old "our girl Meredith" with obvious sarcasm – as offensive. I really need to point this out because this is the sort of thing you see in the financial services sector all the time, making for a hostile work environment.
That said, I don’t find his (bullish) economic arguments convincing. He says "economic growth over the past year has been wildly better than anyone had dared expect." That is not true. Analysts have been saying growth would be fairly robust for some time. Even I have been bullish on economic growth since at least April or May of 2009. The question is not the growth but the sustainability of that growth. This forward-looking perspective is what was missing in Brown’s commentary.
As for Whitney, she is looking forward. She already expects housing to double dip. But she added that fiscal austerity will precipitate a “very rough second half” of 2010. On the jobs front, she sees structurally high unemployment as a continued problem. However, I would note that both she and David Rosenberg had been talking about unemployment in the teens in 2009. Obviously that won’t happen unless we get a full economic double dip and she demurs on making a double dip call in the interview.
From her perspective, all of this is bearish for bank stocks because it will weaken balance sheets. She makes some compelling points on why banks balance sheets are still problematic with residential housing still a worry. Is that why the cautious JPMorgan still refuses to pay a dividend?