Roubini: Don't Expect a V-Shaped Recovery

Nouriel Roubini, the New York University professor and internationally acclaimed doomster, was making headlines again on Monday morning for an interview he gave to Bloomberg News, warning that stocks had risen too high, too fast.

According to Mr. Roubini, the global economy is barely improving and will not fall into a much-hoped-for V-shaped recovery pattern.

“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,” he said. “That might be in the fourth quarter or the first quarter of next year.”

However, even relatively bullish strategists are filled with cautionary notes, raisinig the question of just who is expecting a strong rebound. For example, David Bianco, chief U.S. equity strategist at Bank of America Merrill Lynch, acknowledged that last week’s disappointing economics reports suggest a slow U.S. recovery – but his forecasts have taken this sluggish nature into account.

“The September jobs report and the ISM manufacturing index were reminders that the U.S. economic recovery is occurring slowly,” he said in a note. “We remind investors that our S&P 500 earnings-per-share outlook of $61.50 (U.S.), $70 and $80 for 2009, 2010 and 2011 assumes a slow U.S. recovery with S&P 500 EPS growth led by declining credit costs at Financials and improved profits at the cyclical sectors with heavy foreign or commodity exposure.”

His 12-month target for the S&P 500: 1,200 – or 16% above its current level.

Comments

[JMBishop:]

Say what?...Bank of America and Merrill Lynch?... They can think or say anything they want. After all, they're too big to fail.

Oct 05 06:45 PM

[LilBob:]

I still think "u-shaped" is a little too optimistic. I'm afriad the graph of this recession is going to look more like the Nike logo.

Oct 05 07:52 PM

[Ron Derven:]

We have been continually interviewing small business people on their financial situation since August 2008. Almost monthly, their credit situation has worsened. If small business cannot have access to credit at a reasonable cost, we will not have a V shaped recovery but a double dip recession.

RonD
www.start-a-business-f...

Oct 05 08:39 PM

[Hans Gruber:]

I'm still confused. I thought the sub-prime mortgage mess "was contained." I thought we had "Green Shoots?" I thought the "recession has most likely ended now?" Why can't the experts like Bernanke with all their knowledge, show us some definitive data to back up these prognostications? Surely, the sheeple are smart enought to digest raw data themselves? What kind of mystical herbs are getting smoked at the Federal Reserve these days? Bernanke should show us ALL his wondrous data or just be quiet and stop smirking! I think Jay Leno doing his "Jay-Walking" could have found better forecasts for the economy than our glorious central bank.......

Oct 05 09:30 PM

[The Good Ne...:]

Nouriel,

The V is technically already well formed. Please, please have a seat already...
seekingalpha.com/artic...

GNE

Oct 05 10:24 PM

[AuContrarian:]

Roubini is a one-trick pony, with the false self-assurance to try to move the markets down on a Sunday with an interview. Seeking Alpha genuflects to him, and the market blows him off like a gnat. High comedy in in punditville.

Oct 05 11:08 PM

[GoodTrader:]

Hans, Bernanke gets paid to say good things. It is his job description. He has to inject confidence into the market. The entire monetary system is built on confidence that must keep the ponzi scheme running, or the economy will stop. Bernanke and Greenspan, and the government knew crash would come. They can only delay it, and they change who bears the burden, but they cannot prevent it. Here is why:

www.tradingstocks.net/...


On Oct 05 09:30 PM Hans Gruber wrote:

> I'm still confused. I thought the sub-prime mortgage mess "was contained."
> I thought we had "Green Shoots?" I thought the "recession has most
> likely ended now?" Why can't the experts like Bernanke with all their
> knowledge, show us some definitive data to back up these prognostications?
> Surely, the sheeple are smart enought to digest raw data themselves?
> What kind of mystical herbs are getting smoked at the Federal Reserve
> these days? Bernanke should show us ALL his wondrous data or just
> be quiet and stop smirking! I think Jay Leno doing his "Jay-Walking"
> could have found better forecasts for the economy than our glorious
> central bank.......

Oct 06 01:20 AM

[Moon Kil Woong:]

I tend to like my economists as economists. Roubini is best when he talks about the fundamental economic conditions and let the market determine the valuation. i value him because he shows the unseemly side of economic fact, not because he calls market tops.

In the end one great flaw in financial markets is the diefying of Roubini, Bernake, Greenspan, and the like. When you start requiring que's from people to tell you when to laugh, cry, buy, or sell you no longer are getting the picture. You just confirm you are a lost little lamb waiting to be eaten.

Oct 06 02:02 AM

[Larrysyr:]

I like to think of the market crash as beginning in September '08. On most stock charts, that looks pretty much like the edge of the cliff.

As of the end of August 2008, the S&P 500 was at 1282. Today, it's at 1058. That's a decline of 17.5%, and hardly signals great faith in the economic recovery.

What the market IS pricing in is the realization that the world will continue. There is a lot of shaking out and restructuring ahead, but life will go on. Six months ago, that was a lot less certain.

Oct 06 12:43 PM

[Gold Bug:]

Roubini still bearish on the US Economy
source :
nourielroubini.blogspo...

Oct 07 05:30 PM

[Gold Bug:]

Roubini Says Stocks Have Risen Too Much, Too Soon
Source :
nourielroubini.blogspo...

Oct 08 02:01 AM

[Owen B:]

Roubini in context...

www.erictyson.com/arti...

Oct 12 10:29 AM