James Altucher versus Dr. Doom (Winner: James)

By Eldon Mast, on July 20th, 2010

Many of you will remember last year when we ask Dr. Doom, Nouriel Roubini to take a seat already!  As most of you know Dr. Doom is just that — a Doomster — a perma-pessimist.  Sadly (and mistakenly), because he is always calling for the worst, he is credited with correctly calling the credit crisis and the ensuing recession.  (and will likely be given credit for any other downward trends in the future!)

Fortunately we do currently have more level heads among us. One of those level heads is James Altucher. Forget Dr. Doom and do your homework on James and his columns and interviews.

In this interview with Dow Jones, James gives 7 reasons why the S&P index is headed for 1500.

And in this one, James takes on Dr. Doom and scores knock-out, after knock-out punches.

Enjoy!



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Ben Bernanke and the Great Recession of 2008/2009

By Rok Spruk, on December 31st, 2009

Writing an op-ed for NY Times, Nouriel Roubini discusses the role of Ben Bernanke in this year’s recession (link).

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Surprise, Surprise, Surprise: Roubini, Jobs, Banks, and More

By Eldon Mast, on July 20th, 2009

The immortal words of Gomer Pyle rang out in financial headline after headline this week, “Surprise, Surprise, Surprise!”

First the banking sector became awash in surprisingly good news. Four of the US top banks smashed all earnings estimates and posted collective net profits of $13.6B for the second quarter.

Bank of America (BAC) posted a profit of $3.2B
Citigroup(C): $4.3B
Goldman Sachs (GS): $3.4B
JP Morgan Chase (JPM): $2.7B

The technology sector followed with Intel’s surprise. It posted its best quarter over quarter sales increase since 1988. Further, the chip leader formally asserted that this current quarter ending in Sept, will be significantly stronger than any analysts had even dreamed of. IBM also added its vote of Q3 confidence later in the week.

And there was more surprisingly good news in the jobs data Thursday. The number of initial claims in the week ending July 11 fell 47,000 to 522,000 – the lowest level since early January. The data for continuing claims also fell by 642,000 — the largest drop on record! This huge downward surprise even pulled the four-week moving average of these continuing unemployment claims down by 110,250.

And then on Friday, the housing market chimed in with surprises of its own. Contractors started building single-family homes at the fastest rate in 4-1/2 years. “The bond market was completely caught off guard by the increase in housing starts,” said Jane Caron, chief economic strategist at Dwight Asset Management in Burlington VT.

And stocks surprised most strategists as well. Just last week many had forecast stocks to continue their recent declines (or at least continue to move sideways). Q2 earnings jitters dominated the news. But as markets closed on Friday, many traders were left scratching their heads as the Dow rocketed to its best weekly gain since March, closing within easy striking distance of the 9000 mark.

But perhaps the mother of all surprises this week came from the bear of all bears, Doctor Doom, Nouriel Roubini. Just last week the ultra depressing economic prognosticator wrote an article “Brown Manure, Not Green Shoots.” But this week in a significant flip, flop, Roubini actually stated, “the worst of the worst is behind us.” (He later of course whined that his words were taken out of context.)

Gomer Pyle frequently exasperated his immediate supervisor Sergeant Carter with the Private’s Pollyanna-style demeanor. With positive economic surprises everywhere, it is no surprise that Roubini feels a bit frustrated as well.

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Mr. Roubini, Please Have a Seat Already

By Eldon Mast, on June 4th, 2009

From the gloomster Nouriel Roubini on Apr 23, 2009:

“Today we present some of the main conclusions of the recently released update to the RGE 2009 Global Economic Outlook: The global economy is in the middle of a synchronized contraction that will push global growth into negative territory in 2009 for the first time in decades. This will be the worst financial crisis since the Great Depression and the worst global economic downturn in decades. Global trade volumes face their sharpest contractions of the postwar era – trade is expected to contract 12% in 2009 due to the severe and prolonged global demand slump, excess capacity across supply chains and the continued crunch in trade finance.”

Mr Roubini, please have a seat. The data simply does not support your old, tired, gloomy claims.

1. US. Exports are rebounding sharply. You may have been able to claim that trade was collapsing in the final months of last year as consumers everywhere shut their pocketbooks, but the international wheels of commerce now seem to be spinning well again. The US economy is not collapsing. Export data point to stabilization.

2. The is no “continued crunch in trade finance.” Whether you look at the TED spread, or the Libor/OIS spread they are well below the peak of late October ‘08.

3. There is now a significantly growing list of tangibles that have bounced from their year-end lows. What is probably most notable is that capital goods orders are now up. We are not caught up in your “negative-feedback loop” that will eventually turn into a depression.

4. What is most notable from the past two weeks are bank earnings. Although many like Roubini choose to focus on small increases in allowances for bad debt over the next 1-2 years, what many failed to note was the incredible earnings based on extension of credit by banks in Q1. For instance Wells Fargo took advantage of the drop in interest rates to issue more than $100 billion of mortgages in Q1 alone. Revenues almost doubled to $21 billion, including Wachovia’s contribution, and helped the company overcome $3.3 billion of charges from unpaid loans. The allowance for credit losses totaled $23 billion. If those new loan origination rates continue for Wells, that’s $400B in new loans for 2009 against the $23B reserved for potential losses in 2009 and 2010. Looks pretty bullish to me. In fact, not all banks increased loss allowances.

So Roubini, please sit down. Things may not be completely back to normal. But there is no doubt that conditions aren’t as dire as you continue to claim.



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