Meredith Whitney Talks Iran War's Market Impact & Consumer Health

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Place, the right time to speak to Meredith Whitney, who's seen ups and downs, to say, Alice, how do you stay invested given the day to day madness of these war headlines?

I think you do what most investors are doing, which is ignore it. I mean, there's not to be a Debbie downer, but it's it's it's unrealistic to think that this war gets sewn up in you know, in days or even months, and we and if even if it does, the terms don't even seem very agreeable. So we're gonna have elevated prices for a long time.

You know.

I think the financials have been horrible performers this year. The AA stocks, which are agnostic of of this, have have carried the market. So how do you stay invested? You know, you you take a big gulp on the stuff that's down and course and the stuff that's.

A gulp of what isn't shaken her stir exactly.

So, Meredith, what are the banks saying about the consumer, you know, in terms of credit cards and all. That's kind of the first place that we see stress in the marketplaces. If the consumer stressing on the credit front. What are the banks telling?

That has historically always been the case. You saw delinquencies rise into every recession. It's not the case this time. And my contention is that even though there was an article in the Wall Street JOURNALI this week that said delinquency ninety day punks delinquencies was over ten percent, and some really smart people posting forward to the that's based not based in reality, and not based on that bank.

Why is that article which I did not retweet because I agree with you, tell our audience why that article was off the market.

Okay, so the New York Fed has the thirteen point one two delinquency ninety day delinquencies. It does not comport with any bank figures. So I'll give you an example. The largest credit card operator is now Capital One because if it's merger with Discover there.

It's because of of what's his saying, the basket couple, Charles Barkley, that's why there's success the Capitol One guy.

But their thirty days, so they just report thirty days are three point two seven percent. The second largest credit card company that does report ninety days is JP Morgan. Their ninety delinquencies are one point one percent, So you've got to forty percent of the market with those two companies. And so then I look at I'll look at a subprime masure, which is oh and by the way, Capital One has twenty seven percent subprime customers and it's three

Well, you just heard their bottle at Classic Meredith Whitney Paul and it rhymes with Michelle Meyer of MasterCard, who is adamant those numbers weren't what they're seeing at MasterCard.

So how do you view the consumer these days?

It's bifurcated. So if you look at so all.

The major credit card companies, which are regulated entities have de risked, pulled back from the lower income lower five go score a consumer dramatically, and that's Cap One.

They started doing it twenty twenty two, all of the issuers.

So you've got forty five percent of households that are considered less than prime or subprime. They're going to things like payday lending, like payday lending or pay on demand, which has grown through the roof. They don't qualify for home equity loans, so they're selling a piece of their equity to a private company that the equity interest accrues over time. And so these are adverse situations for any consumer. So the consumer on the lower end, forty five percent

Meredith Whitney with us here on banking, here on finance as well, you're so good and we're not going to have the subprime reducts of collective memory of seven. Oh wait when you see the securitization out there, now bring it over to his Pall's done better than mean. Private credit. Are there shadows out there you're worried about?

Well, today would erase those shadows because software is doing well and private credit worries were over loans to software. But I think in large part there'll be some there'll be some, you know, isolated incidents, but it's certainly the market's not big enough to have any type of stomach risk. And these this is what these guys do, So they're good lenders. So I think that the market looks pretty clean from a credit quality standpoint. I mean, in the consumer sector it's pristine.

I bet before the war, I mean one of the key topics for this marketplace was the private credit market and was some of the credit issues there was that systemic or not? What's your call today?

It's such a small I mean, it's a trillion dollar market maybe, like if you want to get really aggressive, it's a trillion and a half dollar market.

But it's just not big enough to make a difference.

So what are we thinking here? If if you're JP Morgan here, you're some of these big banks here, is it loan growth? Is that the story to grow your business these days? Or do you just is it all capital markets? These days?

It's for the banks, it's been mostly capital markets, and but for JP Morgan, which is spending a lot, it's been cost cutting and just general efficiency. But the banks really aren't growing that much. I mean, if they have big quarters, they haven't only grown for ten years in terms of a loan. From a loan perspective, Let's leave JP Morgan out of the equation. Because they pull off I don't know how they do it. But everybody else has been either flat or.

Declining. And Bank of America's trunk. It's consumer effort.

I've got with Scarlett food, Bloomberg money. Look for that, folks. It's Friday twelve noon, you know, Meredith, I'm getting inundated everybody that has a family office. Meredith Whitney on family offices. They weren't like a big deal fifteen years ago.

Were There's just so much more money out there. So people, do you have a family office?

Are you?

I am the family office and walking exactly. But these family offices are huge now. And I have a lot of friends who run family offices.

And are they regulated? Is there a form adv like an investment advisor?

I don't think so, but they get they get shown notes. The family offices now are the for all the wealth management businesses. I mean JP Morgan courts these family offices all day long, and they're they're like.

A prime broker. JP Morgan is like a prime broker with them.

Yes, and you know, with loans with everything. And so if you're Tom, I'm sure you have a family office. So all of your properties have to be managed, your all your various accounts, Swiss accounts, all in cash, have to be managed, and you don't have time, especially with your new TV show, so you're going to hire her family.

Office are on the side.

Actually, folks, in my family office is called Tuition Inc.

Believe it.

Meredith, thank you, thank you, thank you so much. Meredith, be there.