Meredith Whitney recently stopped by the NYSE to chat with CNBC's Maria Bartiromo about the health of the banking sector and consumer spending in the current recession.
Whitney, who recently formed the Meredith Whitney Advisory Group, told CNBC that banks are currently overvalued and their recent earnings were goosed higher with government aid.
" "...At a core basis, I would not own these stocks," Whitney said in a live interview. "Their business models are not going to come back."
Whitney, a former analyst at Oppenheimer who has her own firm, is renowned for calling out the problems with banks' toxic assets before the issue became widespread.
"This is the great government momentum trade," Whitney said on why bank stocks had seen some improvement lately. "But the underlying core, earnings power of these banks is negligible." "
Whitney also discussed the coming drop in consumer spending and followed up on some of her earlier comments/forecasts on the contraction of consumer credit lines with new data.
Plus, discussion of the stress tests for banks and how government's involvement in the markets have disrupted the rules of the game. Check it out.
Related articles and posts:
1. Meredith Whitney CNBC interview transcript - Moneycontrol.
2. Meredith Whitney on FT.com - Finance Trends.