Wednesday, May 27, 2009

Roubini sees some light at the end of the tunnel

At the end of April, Roubini said:

I see the economy contracting all the way through the end of the year, going from minus 6 to minus 2, not plus 2. And next year the growth of the economy is going to be very slow, 0.5 percent as opposed to the 2 percent–plus predicted by the consensus.

Yesterday, speaking in Korea, Roubini now says this:

"The contraction is still occurring and the recession is going to be over more towards the end of the year rather than in the middle of the year."

"A more sober analysis suggests we're closer to the bottom; there is light at the end of the tunnel, but it's going to take a while longer, and the recovery is going to be weaker than otherwise expected."

Now he sees some light at the end of the tunnel. On April 8, when this bull market was just a month old, he was calling Cramer a buffoon, and Roubini said the latest surge is just another bear market rally following the pattern of other rallies after the government intervened. He expects the market will test the previous low because of worse-than-expected macroeconomic news, disappointing earnings and because banks will fail after the stress tests come out.

On March 9, when the bull market started, Roubini said we would be stuck in this mire for another 36 months, and the odds of a Depression were 66%.

Amazing what a 40% rally in the stock market does to those who predict doom!

Now I'm only highlighting the good professor, because you'll soon see this story played out everywhere, as this bull market shatters those who placed their faith in fear.

Now if the Professor of Doom, who has been rather intractable in his bearish viewpoints can see a little bit of light, don't you think it's starting to even become obvious for those that aren't so predisposed to look at the dark side?

It may enough be obvious enough for Meredith Whitney!

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