Roubini: "Stock & commodity markets to drop," "New financial instability here&quo

Discussion in 'Wall St. News' started by ByLoSellHi, Oct 4, 2009.

  1. Roubini Says Stocks Have Risen ‘Too Much, Too Soon, Too Fast’
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    By Shamim Adam and Francine Lacqua

    Oct. 4 (Bloomberg) --
    New York University Professor Nouriel Roubini, who accurately predicted the financial crisis, said stock and commodity markets may drop in coming months as the gradual pace of the economic recovery disappoints investors.

    “Markets have gone up too much, too soon, too fast,” Roubini said in an interview in Istanbul yesterday. “I see the risk of a correction, especially when the markets now realize that the recovery is not rapid and V-shaped, but more like U- shaped. That might be in the fourth quarter or the first quarter of next year.”

    Stocks have surged around the world in the past six months as evidence mounts that the economy is emerging from its deepest recession since the 1930s. The Standard & Poor’s 500 Index has soared 51 percent from a 12-year low in March while Europe’s Dow Jones Stoxx 600 is up 48 percent. The euphoria contrasts with the cautious tone of Group of Seven policy makers, who said after their meeting in Istanbul yesterday that prospects for growth “remain fragile.”

    “The real economy is barely recovering while markets are going this way,” Roubini said. If growth doesn’t rebound rapidly, “eventually markets are going to flatten out and correct to valuations that are justified. I see a growing gap between what markets are doing and the weaker real economic activities.”

    ‘Anemic’ Recovery

    The International Monetary Fund predicts the global economy will expand 3.1 percent in 2010, led by growth in Asia, after a 1.1 percent contraction this year. That is still “anemic” and “very weak,” Roubini said.

    U.S. stocks fell last week after manufacturing expanded less than anticipated and unemployment climbed to a 26-year high, fueling concern the economy is rebounding more slowly than forecast.

    Gains in the S&P 500 have pushed valuations in the index to more than 19 times reported operating profits from the past year, data compiled by Bloomberg show. That’s near the most expensive level since 2004.

    The performance of the U.S. economy is probably more sluggish than reflected in stock markets, risking a correction in equities, Nobel Prize-winning economist Michael Spence said last month. U.S. stock-market investors have “over processed” the stabilization of growth in the world’s largest economy, Spence said.

    Creating Bubbles

    The global equity rally has added about $20.1 trillion to the value of stocks worldwide since this year’s low on March 9. Governments have poured about $2 trillion of stimulus into the global economy while central banks have cut interest rates to close to zero in efforts to revive growth.

    “In the short run we need monetary and fiscal stimulus to avoid another tipping point and to avoid deflation, but now this easy money has already started to create asset bubbles in equities, commodities, credit and emerging markets,” Roubini said. “For the sake of achieving growth stability again and avoiding deflation, we may be planting the seeds of the next cycle of financial instability.”

    To contact the reporters on this story: Shamim Adam in Istanbul at; Francine Lacqua in Istanbul at
    Last Updated: October 4, 2009 06:57 EDT
  2. "Beware the cowboy who has no cows." In this case meaning, Roubini doesn't trade. If he were so fucking smart he would be rich, not just famous.
  3. I think he's a full Professor, which means his TA's teach for him, he's written a book that sold pretty well, and he gets put up in nice hotels to travel the world talking his book, so.....not so bad a life huh?
  4. I am a published author myself in an equally specious discipline, and I can assure you that it doesn't get you laid. So Rubb-me-ni is not only poor, he is horny. Which accounts for his beerish buyass.
  5. nitro


    That reasoning is flawed in intutionist logic, which is what should be used in everyday life, not traditional boolean logics which lead to false statements such as this.

    I know people that are insanely bright and in some cases have to beg for food and live on the kindness of others. They live only for their art. A recent example is

    He is due the millenium prize of 1,000,000 and other huge awards, all of which he has turned down. Instead he lives with his mother in St Petersburg Russia and has very little interest in most of what society has to offer.

    Of course, if you define smart as having money, well then that is a definition, not a theorem, and hence should be stated as such.

  6. History is littered with guys who got it right once or twice
    There ain't too many how 'keep' getting it right year on year

    Warren Buffet maybe?
  7. Actually, he is pretty smart and, I dare say, probably enjoys a little more coin of the realm than you do.