By Polya Lesova | From MarketWatch.com | On March 19th, 2012
“What I am worried about is the following: gas prices have been high and the effect on the consumer has been hidden,” due to the mild winter, Ross told MarketWatch in an interview Monday at the New York Stock Exchange, on the sidelines of an event promoting investment in Ireland.
“If we hit $5 at the gas pump over the summer, that would have a profound effect on the consumer,” he said. Summer is the peak U.S. driving season.
Ross, who is chairman and CEO of WL Ross & Co. and is known for investing in the U.S. steel and textile industries, said that after rising gasoline prices, the second biggest risk to the U.S. economy is “whatever happens with Iran.” Read more on steel stocks.
The standoff between the west and Iran over the oil-producing country’s nuclear program has escalated in recent weeks, prompting speculation of a potential military conflict.
Ross also discussed natural-gas prices, saying he is “long term very bullish; short term, not so.” Investment funds managed by WL Ross own a 13.7% stake in natural-gas producer Exco Resources XCO -1.60% and Ross was recently appointed to its board.
As for the U.S. housing market, its health “varies enormously” by region, according to Ross. For instance, it is strong in Miami, but it is very weak in other parts of Florida. Read the latest on U.S. housing data.
Grim read from Greek CDS
What Greek CDS payouts say about market sentiment regarding Greece. Photo: AP.
“We are near the bottom, but we haven’t seen the bottom yet in terms of the aggregate,” Ross said about the housing market.
In Europe, where his firm has invested in Bank of Ireland and U.K. bank Northern Rock, Ross said that “we are looking at a lot of things in Ireland and elsewhere in Europe.”
For instance, Ross said that his firm has looked at the Spanish banking sector, which is undergoing a major restructuring, but that the strikes in Spain against the government’s austerity measures are giving him pause. “We’ve looked at a lot of the Spanish banks…We don’t have a conviction about it,” he said.
Ross credited the recent actions of the European Central Bank, which offered cheap loans to the continent’s struggling banks, with easing the sense of crisis in the euro zone.
“There will be pockets of problems…but Europe has made great strides forward,” Ross said. “The ECB acting like the Federal Reserve is a very major breakthrough.”
Without the ECB’s actions, “the whole world could be different,” he said, adding: “I am a big fan of Mario Draghi.”
Draghi is the Italian-born ECB president who took over the job late last year from Jean Claude-Trichet at a time of intense worries that the euro crisis could spread to Spain, Italy and other sizable economies.
This article was originally posted at http://www.marketwatch.com/story/5-gas-prices-would-tank-consumer-wilbur-ross-2012-03-19?siteid=YAHOOB
