Monday, July 13, 2009
Dr. Doom Speaks, End of Recession in Sight
It is 5:38 AM and our Monday pot of coffee is beeping ready! The Diamond Valley has haze in her sleepy eyes but should wake soon to another beautifil day in the Great Basin. Truth is often something we don't care to hear especially when it carries painful outcomes. The ole Colonel is as guilty of this as anyone and always believes the road is a little straighter and the sun a little brighter in the next valley over. When you find yourself at the business end of a handyman changing a truck tire in the pouring rain, that belief system can be shaken. While Truth sits laughing in your warm dry cab you may wonder if things will ever get better.
Nouriel Roubini has proved to be a prophet of economic truth. A Professor of Economics at the Stern School of Business and sometimes called "Dr. Doom", Roubini has nearly a perfect batting average for the predicting our present financial mess. Check this out:
"In 2005 Roubini said home prices were riding a speculative wave that would soon sink the economy. Back then the professor was called a Cassandra. Now he's a sage." ("Eight Who Saw it Coming" Fortune Magazine, Aug. 2008)
In September, 2006, he warned a skeptical IMF that "the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession." ("Dr. Doom"; Mihm, Stephen, August 15, 2008, New York Times)
He also saw,
"..homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt." The New York Times labeled him "Dr. Doom." In hindsight, IMF economist Prakash Loungani has called him "a prophet." (same New York Times article)
OK...OK Nouriel! So you were right now what? His RGE Global Monitor offers a peak at its new U.S. forecast.
"..The general consensus is that this recession will end sometime in the second half of 2009…. We also expect the pace of contraction of economic activity to slow significantly. We forecast negative real GDP growth in Q2 2009 and Q3 2009, and for real GDP to remain flat in Q4. After the sharp contraction in economic activity in 2009, growth will reenter positive territory only in 2010, and then at a very sluggish rate, well below potential."
And a little more hopefully:
"Improvements in real economic activity are present and visible in the reduction of the pace of job losses, in the improvement in indicators of manufacturing activity, in the stabilization of housing starts and in the improvement of financial conditions."
You can read Roubini's entire report here: RGE Monitor
If Dr. Doom is just a little happier, the Colonel is A LOT happier!
By the by, Barrick has an organizational announcement out today. Check their homepage out with the link in the Miner's Corner to your right.
Enough prognostication, let's walk the walk:
Oil is down $0.82 to $59.07 in early trading (August contract); Gold is down $1.7 to $910.8 (August contract); Silver is down $0.10 to $12.545 (September contract); Copper is up $0.0095 to $2.221 (September contract); Molybdenum is sitting happily at $11.50.
The DOW is down 3.71 points to 8142.8; the S&P 500, down 3.14 points to 875.49. The miners are mixed today:
Barrick (ABX) $31.02 down 1.96%
Newmont (NEM) $37.30 down 0.59%
General Moly (Eureka Moly, LLC) (GMO) $1.85 up 0.54%
Freeport McMoran (FCX) $45.50 down 2.44% (a bellwether mining stock spanning gold, copper & molybdenum)
Steel stocks are mixed(a "tell" for General Moly):
Nucor (NUE) $41.12 down 0.19% - domestic steel manufacturing
ArcelorMittal (MT) $29.99 up 0.98% - global steel producer
POSCO (PKX) $82.46 down 1.72%- South Korean integrated steel producer
The Eureka Miner's Grubstake Portfolio is down 0.69% to $908,469.58