Economists Gary Shilling and Nouriel Roubini were both guests on Bloomberg this morning. Both have been very adept in foreseeing the macro themes playing out in the world the past few years. You can watch the Shilling clip here and the Roubini clip here.
I always find it rather ridiculous when bulls say these two were “wrong” because they did not foresee the magnitude of the stock rally from March to December 2009. (Deirdre Bolton puts this to Roubini in his clip). True they underestimated how much the stimulus-juiced stock market can bounce in the midst of secular bear trends, but while the bulls are bragging about making back some of their losses during that period, if you had listened to these guys on the macro picture, you would not have lost capital in the first place. You would have been out of the stock market before suffering the losses and been much, much further ahead… Such is the ridiculous nature of most financial commentary today; purposely blurring the forest with the trees…
Reminds me of a favourite John Galbraith quote: “It is easier to be firmly anchored in the sea of nonsense than it is to set out on the sea of meaningful thought.”
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ZEW Indicator of Economic Sentiment – Expectations Decrease Strongly
The ZEW Indicator of Economic Sentiment for Germany drops by 18.3 points in September 2010. The indicator now stands at minus 4.3 points after 14.0 points in the previous month. This value is below the indicator's historical average of 27.2 points.
After a strong growth in the second quarter of this year, industrial production in Germany stagnated in July. There was also a decline in incoming orders compared to the previous month. This may not only indicate a temporary slowdown but could well be the first sign of a flattening of
economic activity. Likewise, the financial market experts surveyed by ZEW do not expect capacity utilization of the German economy to improve further during the next half year. The reasons for this could be the expiring of economic stimulus measures in many countries and the fact that many industrialized countries have not yet recovered from the crisis. This puts pressure on the export-oriented sectors.
“In their expectations, financial experts put more weight on risks than they did before. These are for example the slowdown of the US growth and the yet unresolved problems in the euro zone which are for instance reflected by the large interest rate spreads for Greek government bonds.
Nevertheless, the risk of a double dip remains low for Germany”, says ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz.
Once again, the assessment of the current economic situation in Germany improves considerably compared to the previous month. In September the corresponding indicator rises by 15.6 points to 59.9 points. The economic expectations for the euro zone drop by 11.4 points in September. The respective indicator now stands at 4.4 points. The indicator for the current economic situation in the euro zone improves by 6.7 points and now stands at minus 6.3 points.