Nouriel Roubini's Global EconoMonitor

The Latest Bear Market Sucker’s Rally Has Gone Bust as We Are Headed Towards Stag-Deflation

Nouriel Roubini — Wed, 19 Nov 2008 20:12:03 -0600

With major US equity indices free falling over 6% today Wednesday, ending below their October lows and now being back to 2003 levels the latest bear market sucker’s rally is now officially over. A cacophony of delusional bulls – including allegedly savvy investors such as the Sage of Omaha and other luminaries – were spinning for the last month the fairy tale that markets – especially equity markets – had fallen so much that a bottom had been reached and that this was the time to start buying equities. Some of us never believed this self-serving spin and warned repeatedly that both equity markets and credit markets had further severe downside risks (20% to 30% lower for equities). Let’s flesh out the details of this bust of the latest bear market sucker’s rally and consider the future outlook for risky assets…

Roubini Says U.S. Recession to Be Worst in 50 Years: Video

Nouriel Roubini — Wed, 19 Nov 2008 09:42:24 -0600

Bloomberg (Nov. 19, 2008): Roubini Says U.S. Recession to Be Worst in 50 Years (click for video)

Transcript of Talk at AEI seminar on the "The Deflating Mortgage and Housing Bubble, Part IV: Where Is the Bottom?"

Nouriel Roubini — Tue, 18 Nov 2008 12:09:43 -0600

Here is below the annotated transcript of my talk at the American Enterprise Institute’s September 30, 2008 seminar "The Deflating Mortgage and Housing Bubble, Part IV: Where Is the Bottom?" The transcript is courtesy of The Housing Doom. For those who are interested there is also a video version of my talk.

20 Reasons Why the U.S. Consumer is Capitulating, thus Triggering the Worst U.S. Recession in Decades

Nouriel Roubini — Fri, 14 Nov 2008 10:52:11 -0600

Today’s news about October retail sales (-2.8% relative to the previous month and now down in real terms for five months in a row) confirm what this forum has been arguing for a while, i.e. that the U.S. has entered its most severe consumer-led recession in decades. At this rate of free fall in consumption real GDP growth could be a whopping 5% negative or even worse in Q4 of 2008. And this is not a temporary phenomenon as almost all of the fundamentals driving consumption are heading south on a persistent and structural basis. Consider the many severe negative factors affecting consumption. One can count at least 20 separate or complementary causes that will sharply reduce consumption in the next several years:

RGE Content: Weekly Roundup

RGE Lead Analysts — Fri, 14 Nov 2008 09:07:03 -0600

Check out all the great contributions that were published during the past week on RGE’s Nouriel Roubini's Global EconoMonitor, RGE Analyst’s EconoMonitor, U.S. EconoMonitor, Emerging Markets Monitor, Global Macro EconoMonitor, Finance & Markets Monitor, Asia EconoMonitor, Latin America EconoMonitor and Europe EconoMonitor.

Explaining Today's Bounce

Nouriel Roubini — Thu, 13 Nov 2008 17:26:56 -0600

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Roadmap for the G20

RGE Lead Analysts — Thu, 13 Nov 2008 09:43:54 -0600

President Bush has invited the heads of state of the Group of 20 (G20) nations for a summit on November 15 in an effort tocontinue responding in a coordinated way to the unfolding financial and economic crisis, and also to discuss weighty issues such as regulatory reforms, improving banking and capital market supervision and reforming the international organizational structure to avoid the next crisis. The G20group, which accounts for 90% of global GDP, includes 10 major emerging economies - including Brazil, China, India, Saudi Arabia and South Africa among others, along with members of the G8, Australia and the European Union.This meeting, which some have called a second Bretton Woods, follows a meeting of the G20 finance ministers and central bank governors on November 9and meetings in DC at the beginning of Octoberthat somewhat opened the door to broaden the club of global economic leadership. Given the issues on their agenda, markets will be watching to see what reforms might be on the cards. However, while most governments have been advocating the need for more concerted global efforts, most policies must still be taken at the national level.

The Dismal Outlook for the US and Global Economy and the Financial Markets

Nouriel Roubini — Tue, 11 Nov 2008 11:45:31 -0600

Here is a below brief summary of many of the points that I have made for the last few months on the outlook for the U.S. and global economy and for financial markets:

Latest Roubini Interviews With CNBC On the Circuit City Bankruptcy File and The US Financial Crisis

Nouriel Roubini — Mon, 10 Nov 2008 11:09:12 -0600

CBNC (Nov 10, 2008) Circuit City Files for Chapter 11(click for video) CNBC (Nov 10, 2008): New Economy Task Force (click for Video) CNBC (Nov. 10, 2008): Market Task Force (click for video) CNBC (Nov. 10, 2008) Parting Shoots (click for video) From CNBC: The economy will worsen in the coming months and cause the market to fall another 20 to 25 percent in the United States and abroad, said Nouriel Roubini, a New York University business professor, on CNBC’s “Squawk Box” on Monday. “There's going to be negative growth all the way to the end of 2009," he said. “The surprises from now are going to be on the downside, for the economy, for earnings, for the financial system." Job losses will accelerate in the next months, Roubini said, and he expects a weak economic recovery in the short and mid-term. “There's going to be a very slow recovery, because you have the financial system that's impaired; earnings are not going to grow very fast, and therefore the stock market will go sideways for quite a while,” he said. More Economic News on CNBC.com:

The Economic Mess and Financial Disaster that Obama Will Inherit

Nouriel Roubini — Thu, 06 Nov 2008 12:56:24 -0600

The good news is that America has just elected a president with leadership, vision and great intelligence. President Obama will also choose a first rate economic team: individuals such as Larry Summers and Tim Geithner would be excellent choices for the position of Treasury Secretary. Obama and his team are fully aware of the very difficult economic and financial challenges that the country is facing and will work hard to resolve them. However, Obama will inherit and economic and financial mess worse than anything the U.S. has faced in decades: the most severe recession in 50 years; the worst financial and banking crisis since the Great Depression; a ballooning fiscal deficit that may be as high as a trillion dollar in 2009 and 2010; a huge current account deficit; a financial system that is in a severe crisis and where deleveraging is still occurring at a very rapid pace, thus causing a worsening of the credit crunch; a household sector where millions of households are insolvent, into negative equity territory and on the verge of losing their homes; a serious risk of deflation as the slack in goods, labor and commodity markets becomes deeper; the risk that we will end in a deflationary liquidity trap as the Fed is fast approaching the zero-bound constraint for the Fed Funds rate; the risk of a severe debt deflation as the real value of nominal liabilities will rise given price deflation while the value of financial assets is still plunging. This is the bitter gift that the Bush administration has bequeathed to Obama and the Democrats. Given this dismal background, let us consider next in more detail the macro outlook for the U.S. and global economy and its implications for financial markets…