Kotok Sounds Alarm on Financials, Fingers Merrill, Wachovia

A colleague, who is close to a number of fund manager talking heads, observed that there was an uncharacteristic, gaping disparity between what many of them are saying on TV (“it’ll be over in a quarter or two”) and their far more downbeat private views. He did not offer a reason for their lack of candor, but I’d assume it is a reluctance to fan fears in already edgy markets.

Today’s interview at CNBC with David Kotok of Cumberland Advisors may embolden some of these commentators to become more outspoken.

Kotok argues that the financial crisis is only about half way over and another leg down is in the offing. His main reason is that banks have continuing needs for capital and at the current costs in the markets, the math doesn’t work. Some firms will be unable to raise funds privately.

Kotok also believes with rising international political tensions and other advanced economies faltering, we could see a strong dollar next year in combination with rising oil prices.

Click here for the video and related news story.

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  1. Marsha Keeffer

    The firms that will be unable to raise funds – whether public or private – include Fannie Mae and Freddie Mac. They’re about to undergo a transformation. The losses will be staggering. Execs don’t want to own up because they know it will force everything lower. I’d agree we’ve got a long way to go to touch bottom.

  2. S

    Kotak is a CNBC Chill. If you track the progression of his views over time, you would see he was 100% in the Fed is going to save the day crowd. And this becasue accroding to “insiders” he was close to the Fed – whatever that means. I wouldn;t pay this guy one bit of mind frankly. It doesn;t take a genious on a 180 point day to get on TV and regurgitate a few Bloomberg and FT articles.

    This guy has less than zero credibility, if that is possible. This is almost like quoting Steve Liesman.

  3. Anonymous

    strong dollar next year in combination with rising oil prices.

    I would like to hear him explain how this is going to work. Agree with above his views change with the weather of the day… Nothing new here.

  4. Independent Accountant

    I saw the Kotok video and largely agree with him. I inaugurated “Wachovia Death Watch” on 25 July 2008 at my blog.

  5. Matt

    Didn’t Whitney say much similar on BloombergTV a month ago?

    And the commentary couldn’t decide between realist and cassandrine?

    The bearish pitch sounded pretty well-founded to me.


  6. Anonymous

    An interesting discussion/analysis piece would be an issue you briefly mention and then drop. Namely, why are these finance pros getting away with lying on broadcast media when they’re willing to admit the truth in private to friends?

  7. Anonymous

    Kotok’s been all over the map on this issue – like a deer caught in the headlights from both directions. Chronically nervous nellies don’t make credible deep thinkers.

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