Some quick additional comments from my CNBC appearance this morning:
- On Countrywide/BofA … As I said on-air, why should I have more confidence that Ken Lewis and BofA have timed this infusion better than their last one? After all, since their $2-billion for 16% deal months ago the stock has fallen 50%. Let’s just say that as far as bottom-spotters go I put more faith in Sir Mixalot than I do in BofA’s Lewis & Co.
- On airlines … Despite generally being incompetent competitors post-deregulation — they lost 30% share over the period — I actually like the Big Six airlines in here. Weakening consumer spending will hurt the Greyhounds of the air — JetBlue, Midwest, Southwest, etc. — but Delta, et al., with consolidation (driven, in part by Open Skies) and a little help from lower/stabilizing fuel prices, could do very well over next twelve months. Too bad there isn’t an airline ETF, of course, with IYT being no help.
- On a double-dip … A point I meant to make, but never got to it, was this: An outlier scenario that no-one is talking about is a double-dip recession. My sense is that the numbers suggest we are in a weak recession right now, but we will come out of it fairly quickly, likely by the second quarter of ’08, in part because of the psychological effect of perceived Fed attention. Trouble is, there is no reason to expect the economy to come back barnburners afterward, with lots of pressure on consumer spending, a weakened global economy, etc. The upshot: We could see a second cycle of weakening in the latter part of the year, which is not yet being discussed.