Dr. Doom and the Markets
Jul 17, 2009
Posted by Jody Eisenman | Filed under Uncategorized
NYU professor Nouriel Roubini, who is known as “Dr. Doom” in the investment media, was widely quoted yesterday as stating that he expected the recession to end this year. Roubini has achieved notoriety for his notable calls that the banking system was in a severe crisis. Therefore, to have this man turn positive was a major shift. On that news, the market jumped 95 points yesterday, with the S and P adding 8 more to close at 940. Unfortunately, in a statement released late in the day, Roubini claimed that he had been misquoted. On his site, RGEMONITOR.COM, the economist stated quite clearly that “my views expressed today are no different than the views I have expressed previously.” He goes on to say that many problems still exist; namely, the massive debt in the household and financial sectors, and the re-leveraging of the public sector with massive new debt issued by the US government. He also believes that the unemployment rate which is currently at 9.5%, will peak at 11% next year. So much for his bullish sentiment.
In other noteworthy news, it seems CIT group is on the verge of filing bankruptcy. CIT, which makes loans to small and medium size businesses, has been spurned by the government in it’s’ request for emergency bailout funding. The government had previously injected $2.3 billion, and those funds will presumably be lost if the company goes under. Despite the Lehman debacle last year, the Fed has apparently decided that a CIT bankruptcy would not be a major disruption to the financial markets.
Meanwhile, the stock market continued to bounce strongly of the technical base of 880-890 on the S and P. As I have stated previously, S and P 950 or thereabouts is going to be a key number. We have been unable to break through this number decisively. We look ready to test it again soon.
July 24th, 2009 at 2:52 pm
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