Roubini: How Bearish Does The Stock Market Get During a Recession? 28% Down…or Growling in Bearishness

Submitted by PD on September 5, 2006 - 8:35pm.

Thanks for the link. Good info.

Submitted by sdduuuude on September 5, 2006 - 8:42pm.

I note a comment on this page where someone says he has been predicting this recession for some time now.

When exactly is it going to hit?

Timing of a prediction is important. You can't say "a recession is coming" for 5 years, then claim success when it hits in the 6th year.

I'm not saying I disagree with the article, but I am interested in the timing of his expectations. If the recession is suppoed to hit in late 2007, then we may have many months of healthy stock market before the pre-recession bear hits. If it is coming in early 2007, maybe not.

Submitted by powayseller on September 5, 2006 - 10:40pm.

I started reading Nouriel's blog about a month ago. He predicts a recession in Q1 07. That's all I know about his recession call.

Submitted by balasr on September 6, 2006 - 4:05am.

His recession call is recent. He started a few months back. If it does happen, he'll end up as an instant superstar.

Submitted by The-Shoveler on September 6, 2006 - 5:53am.

Nor_LA-Temcu-SD-Guy

Heck, I have been saying for 3 years that when the housing market goes it will take the whole economy with it. (The housing market is the economy these days).

Damm Can I get super star status too ????

Submitted by sdduuuude on September 6, 2006 - 8:50am.

Thanks. Interesting article. I think there is a recession coming also, but I think it will be closer to Q108 than Q107. Things take time to percolate through the economy and this housing thing has been moving so slowly for so long, I don't see it affecting the economy so quickly. Just my intuition.

Submitted by The-Shoveler on September 6, 2006 - 9:17am.

Nor_LA-Temcu-SD-Guy

OK to be fair, I sold My Valencia house in December 2004, thinking that the crash would come in 3Q 2005 resession soon after. I also sold my Stocks in January 2005, and they are just about where they were then now so not up, not down (Not bad for me). So maybe I was off a year (or so we will see).

Sorry Sold my stocks January 2006, and they are about in the same place (price) now as then.

Submitted by cabinboy on September 6, 2006 - 9:49am.

Our economy has weathered the recent 50% increase in gasoline prices without much of a hiccup. With fuel prices seamingly pulling back, a large % of Amercian consumers will now feel less of a bind than they have over the past year. I don't care about the idiots with resetting I/O loans. Those folks never had a dime in the stock market or savings to begin with. They'll simply BK before they curtail their consumption.
If the Fed doesn't raise rates above the current level, I do not believe we will see a recession by Q4 '07, let alone Q1. If rates go any higher, the stock market will suffer as fixed return investments simply get too enticing (they already are as far as I'm concerned). I think the dollar seems to be holding on to its value well enough for the FED to hold at a level that still encourages U.S. stock market investment. IMO, that's why we've had a solid August, not because fool's money is pouring in.

Submitted by cabinboy on September 6, 2006 - 9:56am.

And if it doesn't, and you all miss out on 15% domestic returns and 25% emerging market returns between now and the end of Q1 '07, will you call him out?

Submitted by powayseller on September 6, 2006 - 3:09pm.

He sees a recession as imminent because we are seeing such a large drop in GDP, just as we did in 2000-2001. GDP went from over 5% to just over 2% quarter over quarter, this year and in 2000. Read his blog from last month. The GDP growth is slowing rapidly, and that is what happens in a recession.

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