w****l
发帖数: 6122 | 1 想抄底的同学最好还是多存钱吧。
http://www.rgemonitor.com/roubini-monitor/254354/the_dismal_outlook_for_the_us_and_global_economy_and_the_financial_markets
The Dismal Outlook for the US and Global Economy and the Financial Markets
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Delicious Digg Facebook reddit Technorati Nouriel Roubini | Nov 11, 2008
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:
The U.S. will experience its | w****l
发帖数: 6122 | 2 想抄底的同学最好还是多存钱吧。
http://www.rgemonitor.com/roubini-monitor/254354/the_dismal_out
The Dismal Outlook for the US and Global Economy and the Financial Markets
Email PrintShare
Delicious Digg Facebook reddit Technorati Nouriel Roubini | Nov 11, 2008
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:
The U.S. will experience its most severe recession since WWII, much worse
and longer and deeper than even the 1974-75 and 1980-82 recessions. The
recession will continue until at least the end of 2009 for a cumulative GDP
drop of over 4%; the unemployment rate will likely reach 9%. The US consumer
is shopped out saving less and debt burdened and now faltering: this will
be the worst consumer recession in decades.
The prospect of a short and shallow 6-8 months V-shaped recession is out of
the window; a U-shaped 18-24 months recession is now a certainty and the
probability of a worse multi-year L-shaped recession (as in Japan in the
1990s) is still small but rising. Even if the economy were to exit a
recession by the end of 2009 the recovery could be so weak because of the
impairment of the financial system and of the credit mechanism (i.e. a
growth rate of 1-1.5% for a while well below the potential of 2.5-2.75%)
that it may feel like a recession even if the economy is technically out of
the recession.
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.
The world economy will experience a severe recession: output will sharply
contract in the Eurozone, UK and the rest of Europe, in Canada, Japan, and
Australia/New Zealand; there is also a risk of a hard landing in emerging
market economies. Expect global growth – at market prices – to be close to
zero in Q3 and negative by Q4. Leaving aside the effects of the fiscal
stimulus China could face a hard landing growth rate of 6% in 2009. The
global recession will continue through most of 2009.
The advanced economies will face stag-deflation (stagnation/recession and
deflation) rather than stagflation as slack in goods markets, slack in labor
markets and slack in commodity markets will lead advanced economies
inflation rates to become below 1% by 2009.
Expect a few advanced economies (certainly US and Japan and possibly others)
to reach the zero-bound constraint for policy rates by early 2009. With
deflation on the horizon a zero-bound on interest rates implies the risk of
a liquidity trap where money and bonds become perfectly substitutable, where
real interest rates become high and rising thus further pushing down
aggregate demand, and where money market funds returns cannot even cover
their management costs. Deflation also implies a debt deflation where the
real value of nominal debts is rising thus increasing the real burden of
such debts. Monetary policy easing will become more aggressive in other
advanced economies – even if the ECB will cut too little too late - but
monetary policy easing will be little effective as it will be pushing on a
string given the glut of global aggregate supply relative to demand and
given a very severe credit crunch.
For 2009 the consensus estimates for earnings are delusional: current
consensus estimates are that S&P 500 earnings per share (EPS) will be $90 in
2009 up 15% from 2008. Such estimates are outright silly and delusional. If
EPS fall – as most likely – to a level of $60 then with a multiple (P/E
ratio) of 12 the S&P500 index could fall to 720, i.e. about 20% below
current levels; if the P/E falls to 10 – as possible in a severe recession,
the S&P could be down to 600 or 35% below current levels. And in a very
severe recession one cannot exclude that the EPS could fall as low as $50 in
2009 dragging the S&P500 index to as low as 500. So, even based on
fundamentals and valuations, there are significant downside risks to U.S.
equities (20% to 40%). Similar arguments can be made for global equities: a
severe global recession implies further downside risks to global equities of
the order of 20-30%.Thus, the recent rally in US and global equities was
only a bear market sucker’s rally that is already fizzling out buried under
a mountain of awful worse than expected macro, earnings and financial news.
Credit losses will be well above $1 trillion and closer to $2 trillion as
such losses will spread from sub-prime to near prime and prime mortgages and
home equity loans (and the related securitized products); to commercial
real estate, to credit cards, auto loans and student loans; to leveraged
loans and LBOs, to muni bonds, corporate bonds, industrial and commercial
loans and CDS. These credit losses will lead to a severe credit crunch
absent a rapid and aggressive recapitalization of financial institutions.
Almost all of the $700 billion in the TARP program will be used to
recapitalized US financial institutions (banks, broker dealers, insurance
companies, finance companies, etc.) as rising credit losses (close to $2
trillion) will imply that the initial $250 billion allocated to recap these
institutions will not be enough; sooner rather than later a TARP 2 will
become necessary as the recapitalization needs of US financial institutions
will likely be well above $1 trillion.
Current spreads on speculative grade bonds may widen further as a tsunami of
defaults will hit the corporate sector; investment grade bond spreads have
widened excessively relative to financial fundamentals but further spread
widening is possible driven by market dynamics, deleveraging and the fact
that many AAA-rated firms (say GE) are not really AAA and should be
downgraded by the rating agencies.
Expect a US fiscal deficit of almost $1 trillion in 2009 and 2010. The
outlook for the US current account deficit is mixed: the recession, a rise
in private savings and a fall in investment, and a further fall in commodity
prices will tend to shrink it but a stronger dollar, global demand weakness
and a larger US fiscal deficit will tend to worsen it. On net we will
observe still large US twin fiscal and current account deficits and less
willingness and ability of the rest of the world to finance it unless the
interest rate on such debt rises.
In this economic and financial environment it is wise to stay away from most
risky assets for the next 12 months: they are downside risks to US and
global equities; credit spreads – especially for speculative grade – may
widen further; commodity prices will fall another 20% from current level;
gold will also fall as deflation sets in; the US dollar may weaken further
in the next 6 to 12 months as the factors behind the recent rally weather
off while medium term bearish fundamentals for the dollar set in again;
government bond yields in US and advanced economies may fall further as
recession and deflation emerge but, over time, the surge in fiscal deficits
in the US and globally will reduce the supply of global savings and lead to
higher long term interest rates unless the fall in global real investment
outpaces the fall in global savings. Expect further downside risks to
emerging markets assets (in particular equities and local and foreign
currency debt) especially in economies with significant macro, policy and
financial vulnerabilities. Cash and cash like instruments (short-term dated
government bonds and inflation-indexed bonds that do well both in inflation
and deflation times) will dominate most risky assets.
So serious risks and vulnerabilities remain and the downside risks to
financial markets (worse than expected macro news, earnings news and
developments in systemically important parts of the global financial system)
will dominate over the next few months the positive news (G7 policies to
avoid a systemic meltdown, and other policies that – in due time – may
reduce interbank spreads and credit spreads). So beware of those who tell
you that we reached a bottom for risky financial assets. The same optimists
told you that we reached a bottom and the worst was behind us after the
rescue of the creditors of Bear Stearns in March, after the announcement of
the possible bailout of Fannie and Freddie in July, after the actual bailout
of Fannie and Freddie in September, after the bailout of AIG in mid
September, after the TARP legislation was presented, after the latest G7 and
EU action. In each case the optimists argued that the latest crisis and
rescue policy response was “THE CATHARTIC” event that signaled the bottom
of the crisis and the recovery of markets. They were wrong literally at
least six times in a row as the crisis - as I consistently predicted here
over the last year – became worse and worse. So enough of the excessive
optimism that has been proven wrong at least six times in the last eight
months alone.
A reality check is needed to assess the proper risks and take the
appropriate actions. And reality tells us that we barely literally avoided
only a week ago a total systemic financial meltdown; that the policy actions
are now finally more aggressive and systematic and more appropriate; that
it will take a long while for interbank markets and credit markets to mend;
that further important policy actions are needed to avoid the meltdown and
an even more severe recession; that central banks instead of being the
lenders of last resort will be for now the lenders of first and only resort;
that even if we avoid a meltdown we will experience a severe US, advanced
economy and most likely global recession, the worst in decades; that we are
in the middle of a severe global financial and banking crisis, the worst
since the Great Depression; and that the flow of macro, earnings and
financial news will significantly surprise (as during the last few weeks) on
the downside with significant further risks to financial markets. | c*******9
发帖数: 6411 | 3 this Roubini guy might have loss his ass in stock market. |
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