Meredith Whitney, the bank stock analyst whose forecasts have been most accurate, said her best idea was to short Ciitgroup, last week, even at super depressed levels.
Isn’t it a bit late to short Citi? More excellent analysis from Yves Smith. An excerpt:
While I agree that the stress test scenarios are not dire enough (and others, see here and here share that view). Even the anodyne New York Times casts doubts:
But analysts say the administration’s worst projections, which it describes as unlikely, are not much more dire than what many private forecasters already expect.
According to the new Treasury Department guidelines, the banks would have to assume that the economy contracts by 3.3 percent this year and remains almost flat in 2010. They would also have to assume that housing prices fall another 22 percent this year and that unemployment would shoot to 8.9 percent this year and hit 10.3 percent in 2010.
“I don’t think they are harsh enough,” said David Hendler, an analyst at CreditSights, who said the dire projection was itself too optimistic about the growth that would be generated from President Obama’s stimulus program. “That would be a pleasant outcome, but you have to plan for the worst.”
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