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« Goldman's Disappearing Competition & Bonus Backlash With Kudlow And Gasparino (CNBC Video) | Main | The Cold, Hard Slap Of Reality: CNN's Bailout Tracker »
Monday
Jun222009

Yellow Weeds Roubini Sees "A Significant Market Correction For Equities, Commodities And Credit" (CNBC Video)

"Doomin' Aint Easy"

Love Doctor Nouriel Roubini made an appearance on CNBC Europe this morning, where the anchors are apparently not bound by contractual optimism.  At the 2:40 mark, the CNBC anchor said he was "sick of all the green-shoot talk" and thanked Roubini for coining the phrase 'yellow weeds' instead.  Enjoyed that.  Meanwhile, GE executive, John Rice weighed in last Friday on the supposed economic turn.

From Bloomberg:

“I am not particularly of the green shoots group yet,” Rice said today to the Atlanta Press Club, referring to a phrase used by Federal Reserve Chairman Ben S. Bernanke that described signs of a nascent recovery. “I have not seen it in our order patterns yet. At the macro level, there may be statistics suggesting the economy is starting to turn. I am not seeing it yet.”

“We see a world where good companies and good consumers can’t get all the credit we would like,” Rice said. “Companies with lots of cash on their balance sheet are worried about whether they will get what they need for working capital” and are cutting spending.

“Until that changes I don’t think you will see a significant rebound,” Rice said. “We are preparing for 12 or 18 months of tough sledding.”

Back to the Roubini interview summarized by CNBC:

"I see even the risk of a double-dip, W-shaped recession… towards the end of next year," Roubini told "Squawk Box Europe."

"Oil could be closer to $100 a barrel towards the end of this year, this could be a negative shock to the economy," he said, adding that other dangers come from long-term interest rates and big budget deficits.

In the next few months, unemployment may reach 11 percent in the US and around 10 percent in Europe.

Because of bad macroeconomic data and poor earnings prospects as companies have weak pricing power and demand is still subdued, the surprises will be on the downside, he said.

"That's why I believe there's going to be a significant market correction for equities, for commodities and even for credit," Roubini added.

He said recovery signs should come from unemployment, housing, industrial production, sales and consumption data.

"When I look at them I see so far still more yellow weeds than green shoots. They have to bottom out, in my view they haven't bottomed out. This recovery, unfortunately, because of the debt overhang… is going to be a very weak economic recovery, in my view," he added.

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Reader Comments (7)

President Barack Obama doesn’t need to just overhaul financial regulation. He needs to exorcise the ghost of Alan Greenspan.

For far too long, regulators weren’t willing to regulate, inspired by the view of the former Federal Reserve chairman that too much oversight is a greater threat to markets than too little. That turned out to be a bigger cause of the credit crisis than the particular structure of the agencies overseeing the financial system.

http://www.bloomberg.com/apps/news?pid=20601039&sid=aFD57WHsTSiQ
Jun 22, 2009 at 9:36 PM | Registered CommenterDailyBail
Jun 22, 2009 at 9:37 PM | Registered CommenterDailyBail
Slideshow from "Taste Of Bloomington" held Saturday night. Good times.

http://www.idsnews.com/news/multimedia/multimedia_file.aspx?file_id=25628

Beautiful Photos
Jun 22, 2009 at 9:39 PM | Registered CommenterDailyBail
The national debt threshold we just passed

http://optionarmageddon.ml-implode.com/2009/06/19/a-114-trillion/
Jun 22, 2009 at 9:42 PM | Registered CommenterDailyBail
The children of baby boomers will eventually resuscitate the pummeled U.S. housing market, Harvard University said on Monday, but in the meantime, limits on income and credit are sustaining the three-year bust.

http://www.reuters.com/article/newsOne/idUSTRE55L0AO20090622
Jun 22, 2009 at 9:43 PM | Registered CommenterDailyBail
Susan and Mike Telford had a plan back in the boom years in California. They would sell their house outside Fresno at a solid profit and take their equity to this sunny mountain city to build a better life, a fresh-air future in Oregon.

http://www.nytimes.com/2009/06/18/us/18oregon.html?ref=patrick.net
Jun 22, 2009 at 9:51 PM | Registered CommenterDailyBail

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