Meredith Whitney: Housing Will Double Dip, Bank Mortgage Model Broken (CNBC)

Meredith Whitney (Meredith Whitney Advisory Group) was on CNBC talking about the housing and mortgage-backed securities market.  Below I quoted text from CNBC.com.  I didn't hear it on the video unless I missed it.  On the video she said watch what happens at the end of March when the Fed stops supporting the mortgage market (1/3 of Fed's balance sheet tied to mortgages).  From the recent Fed statement.
"To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve has been purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt; those purchases are nearing completion, and the remaining transactions will be executed by the end of this month" [full statement]

She called the correction that started in 2010 [12/9/09 post].  She also said the bank model is broken.  They can't make money on mortgages anymore with the securitization market closed.  
"The asset classes of MBS and Treasurys are priced for a material correction in my opinion," she said. "The only buyers of agency MBS are the Fed and banks so you see how precarious that market is." [Meredith Whitney via CNBC]

I also looked at the NAHB Builder Confidence Index chart a few days ago and saw a possible double dip coming (possible double bottom or retracement in the chart).  There are other data points to use for confirmation like home sales, inventories, Case/Shiller housing price index etc.  I think housing is important and will lead the US markets and economy going forward.  Unless corporations subsidize the mortgage market with all the Benjamins on their balance sheet.  Video below courtesy of CNBC.com.


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