Sonders vs. Whitney on Market’s Current Valuation

Banking analyst Meredith Whitney rattled the markets yesterday when she told CNBC that the U.S. is likely to fall back into recession next year, and said stocks are overvalued. “I haven’t been this bearish in a year,” said Whitney. “I look at the board and every single stock from Tiffany to Bank of America to Caterpillar is up. But there is no fundamental rooting as to why these names are up — particularly in the consumer space.” She warned that a huge problem is that the consumer credit contraction is still accelerating.

Today, however, Charles Schwab Chief Investment Strategist Liz Ann Sonders offered a far different viewpoint. Sonders tells CNBC that historically, the stock market has actually performed best when consumer credit has been the weakest. And, she says that GDP, corporate profits, valuations, and the huge monetary and fiscal stimulus across the globe do indeed provide a number of fundamental reasons as to why stocks have been surging.

In the same interview, Howard Ward of GAMCO Investors and Doug Dachille of First Principles Capital Management offer their takes on such issues as the market’s current valuation and the “new normal”.

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