Economist Nouriel Roubini, who correctly predicted the housing bust and financial crisis back in 2006, said yesterday that the worst of the economic contraction will be seen in the first quarter this year.
After Q1, the rate of contraction will decrease although the economy will still be contracting through the end of 2009. He also said the economy would grow weakly next year.
In other words, Dr. Doom said the worst is over after this quarter.
Specifically, Roubini is saying that an estimated 6% annualized contraction in this quarter will shrink to an annualized contraction of about 2% by the end of the year. Next year will see a very weak rate of growth, estimated to be 1% or less. Now, you can check arithmetic, but if you go from a 6% contraction to a 2% contraction, that's 4 percentage points of improvement. It isn't growth, because the economy is still contracting, but a 4 percentage point improvement is nonetheless certainly welcome news.
At Thursday’s close of floor trading on the NYSE stocks had closed with a healthy gain although they finished more than 1 percentage point below the high point of the day. The DOW was on 7978.08 after a gain of 216.48 points (2.79%) while the S&P finished on 834.38, up 23.30 points (2.87%). The technology-heavy NASDAQ closed on 1602.63 after rising 51.03 points (3.29%).
The dollar traded in risk-acceptance mode (weaker against the higher-yielders and stronger vs. the yen) in N.Y. as stocks advanced, continuing the trend seen overnight. On the day, the greenback ended with a loss of 1.56% to the euro, 1.74% against the pound and 2.04% against Australia's currency as it gained 0.95% on the yen.
Treasuries were sold as traders moved back into riskier assets. On the day, yield on the 2-year note rose 6.3 basis points to 0.879% while yield on the 10-year note lost 10.1 basis points to 2.755%.
Crude for April delivery was recently trading up $4.11 (8.49%) to $52.50 per barrel.
Gold for April delivery was recently trading down $22.50 (-2.43%) to $903.60 per ounce.
The dollar traded in risk-acceptance mode (weaker against the higher-yielders and stronger vs. the yen) in N.Y. as stocks advanced, continuing the trend seen overnight. On the day, the greenback ended with a loss of 1.56% to the euro, 1.74% against the pound and 2.04% against Australia's currency as it gained 0.95% on the yen.
Treasuries were sold as traders moved back into riskier assets. On the day, yield on the 2-year note rose 6.3 basis points to 0.879% while yield on the 10-year note lost 10.1 basis points to 2.755%.
Crude for April delivery was recently trading up $4.11 (8.49%) to $52.50 per barrel.
Gold for April delivery was recently trading down $22.50 (-2.43%) to $903.60 per ounce.
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