EconoMonitor

Nouriel Roubini's Global EconoMonitor

Archive for February, 2010

  • RGE’s Weekly Roundup

    Check out all of the RGE analysis and EconoMonitor contributions that were published this past week at roubini.com.
     
    RGE Analysis [Available to RGE Clients Only]:
    New House Sales Plunge in January by Prajakta Bhide and Christian Menegatti
     
    New single-family home sales have weakened steadily since H2 2009, and in January 2010, new single-family home sales reached a record low, down 77.7% from the peak of July 2005. Meanwhile, purchase mortgage applications have collapsed to levels last seen in 1997. Weak demand-side fundamentals, the gradual removal of government support and the threat of increased competition from foreclosures remain key risks to new home sales in 2010. The numbers suggest that demand for new homes is far from a path of gradual growth, consistent with RGE’s prediction of a slow recovery in the housing sector.

    More ›

  • RGE’s Wednesday Note: Still No Tightening in China

    A credit-fueled investment boom successfully boosted China’s growth to 8.7% in 2009, but cheap money drove up asset prices as well, especially in property markets. As China’s output gap closes, loose money is now set to become inflationary, particularly if China’s potential growth rate has come down slightly, as RGE thinks it has. The People’s Bank of China (PBoC) has twice hiked banks’ required reserve ratios (RRR) in 2010, following a return to net liquidity reductions through open-market operations in October 2009, but RGE suspects that the tightening moves have had little effect. As discussed in a recent RGE analysis, “China: No Exit,” which is available exclusively for RGE clients, China’s monetary policy has shifted toward a neutral stance in recent months, but it will have to tighten further if inflation and the property bubble are to be contained.

    More ›

  • RGE’s Weekly Roundup

    Check out all of the RGE analysis and EconoMonitor contributions that were published this past week at roubini.com.

    RGE Analysis [Available to RGE Clients Only]:

    Latin America: What’s Coming Up? by Bertrand Delgado and Juan L. Maldonado

    The main event this week in Latin America will be the monetary policy decision in Mexico, where RGE expects the central bank to stay on hold at 4.5%.  Moreover, inflation expectations in Brazil are likely to continue to deteriorate as a result of higher-than-expected inflation last week. Finally, market participants will pay attention to economic and fiscal numbers in Argentina, as well as GDP dynamics in Peru.  As expected, Chile’s and Peru’s central banks stayed on hold at recent meetings, indicating that recent surprises on inflation were driven by internal supply side shocks rather than demand pressures.  We are introducing the section “What Else is Cooking in LatAm?” highlighting other important issues affecting the region.

     

    More ›

  • Teaching PIIGS to Fly

    Greece’s fiscal problems are, as I have argued many times, but the tip of a global iceberg. For the next installment of the recent global financial crisis will be rising sovereign risk, especially in advanced economies that run massive budget deficits and accumulate large stocks of public debt as they socialize private financial losses in order to revive economic growth.

    More ›

  • Roubini CNBC Squawk Box Interviews and Report on Sovereign Debt and Global Growth

    CNBC — Sovereign Risks and Realities (Click for Video) CNBC — Insight on the sovereign debt crisis, with Nouriel Roubini, NYU Stern School of Business professor. [7:54] ____________________________________ CNBC — Greece Default Worries (click for Video) CNBC — Insight on the rolling debt crisis, with David Malpass, Encima Global; Nouriel Roubini, RGEmonitor.com; and Andrew Ross […]

    More ›

  • RGE’s Weekly Roundup

    Check out all of the RGE analysis and EconoMonitor contributions that were published this past week at roubini.com.

    RGE Analysis [Available to RGE Clients Only]:

    Nouriel Roubini and his team of analysts released RGE’s Q1 2010 Outlook, which examines trends in economic statistics, financial policy, and politics.  The Outlook contains RGE’s analysis of specific countries and regions; our global growth overview; special sections on commodities, global imbalances, and trade; and our macro forecast table outlining our GDP and CPI projections.  Please see Global Outlook Update: Q1 2010.

    As concerns over Greece’s debt crisis continue to mount, along with the rest of the PIGS that face similar threats, European leaders are discussing possible courses of action that would stabilize the situation and minimize the risks of contagion and moral hazard. Without a deliberate and detailed plan, the risks are only heightened. Nouriel Roubini and Arnab Das describe their plan in the following RGE analysis; Will Europe’s PIGS Learn to Fly?

    More ›

  • Will Europe’s PIGS Learn to Fly?

    As concerns over Greece’s debt crisis continue to mount, along with the rest of the PIGS that face similar threats, European leaders are discussing possible courses of action that would stabilize the situation and minimize the risks of contagion and moral hazard. Without a deliberate and detailed plan, the risks are only heightened. Nouriel Roubini […]

    More ›

  • Nothing “Perverse” about the Flight to Bonds

    The renowned CIO of Legg Mason, Bill Miller, has written an opinion piece in the FT today, criticizing investor preferences for bonds over equities, as demonstrated by the re-direction of equity fund flows toward bond funds. He believes that things are getting better, based on GDP numbers, credit spreads, and the level of bond re-financing. These are not, in our view, good indicators. GDP figures are, at best, inconclusive; the inventory cycle contributed 3.4 pp of the 5.7% Q4 GDP number and the other 2.3 pp is likely substantially stimulus-related. Furthermore, we could expect support from net exports to decline thanks to the rally in the dollar and the underlying causes of the risk aversion that drove it, i.e. the need for demand hitting fiscal adjustment in the eurozone periphery. Credit spreads have been distorted by extraordinary liquidity measures and a lack of imposed losses on debtholders and the level of bond re-financing reflects manufactured and unsustainably low rates. A constructive view on equities, in our view, necessarily assumes above-average inflation and good growth and underestimates the risk of a double-dip. This assumption stands in stark contrast with RGE’s forecast for anemic growth in the developed economies and glosses over significant slack in labor markets and excess capacity across sectors and regions.  

    More ›

  • RGE’s Wednesday Note – Global Trade in Recovery Mode

    In this week’s note, we examine trends in international trade. The following content is drawn from a special report on trade in RGE’s newly released Q1 2010 update to our Global Economic Outlook. Clients can read the full report, which looks into factors that will drive trade flows in 2010, here: “Trade: Q1 2010 Outlook.”

    More ›

  • Roubini Bloomberg Interview on Sovereign Debt and U.S. Outlook

    Bloomberg — Nouriel Roubini talks with Bloomberg’s Carol Massar and Matt Miller about the outlook for the U.S. stock market. Roubini also discusses the risk of sovereign-debt default, necessary steps to reduce government debt and the likelihood of aid for Greece from the International Monetary Fund. (Click for Video)   Bloomberg — 00:00 G-7 meeting;sovereign-debt […]

    More ›