Don't look now but Kudlow actually allowed a resasonable discussion in this segment…
Another month of record bank repossessions, even though the notices of default are down 30 percent year over year, reports CNBC’s Diana Olick. Could the worst be on the way, with Barry Ritholtz, Fusion IQ CEO, and Brett Arends, Wall Street Journal columnist.
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Henry McVey, the highly regarded head of Global Macro and Asset Allocation for Morgan Stanley Investment Management, explained it in a recent interview:
“Our most likely scenario is that we are in a secular bear market that started in 2000, and we think there are three phases. Phase 1, which occurred in 2001 and 2002, was related to the beginning of the contraction of P/E multiples. Ultimately, we think the multiple on the S&P 500 will be cut by 50% to 60%, from 26 times earnings [trailing actual earnings, not estimated future earnings] to somewhere between 11 and 13 times. Phase 2 was the pricking of the leveraged-earnings bubble, which occurred in 2007 and 2008, and that resulted in a 50% contraction in earnings growth. We expect the third and final phase, which will occur in the next couple of years, will be related to the massive debt overhang we are experiencing in developed governments around the world. Governments will need to eventually pay down that debt to gain back trust and respect with investors, and that could be a painful process when it finally begins.”