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More Creeping Doom And Gloom Stateside

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Jim Paulsen of Wells Capital Management says, however, that market indicators that should be flashing red if the economy is in big danger, aren't. Stocks are outperforming bonds, emerging markets and non-energy commodity prices are recovering, and non-auto retail sales are up more than 10% on an annual basis since the end of 2005. Housing is slowing in previously overheated markets but is up in other regions.

"Here we are in the midst of a 'slowdown,' and we're coming off a 16% (corporate) profits quarter? What the heck is that?" Paulsen says. "I can't remember a housing cycle that hurt anybody because it only went up at 3%."

Then there is a small but growing minority of economists who warn that the downturn could be severe. New York University professor Nouriel Roubini gives 70% odds of a recession by year's end. Merrill Lynch analyst David Rosenberg puts the chances of a recession at 40% to 80% in the coming year, based on models and market conditions. A recent Blue Chip survey of economists pegged the risk at 27%, up from earlier estimates.

"This is a tipping point for the consumer and the economy," Roubini says. He spells out a long list of potential risks that could push the country into trouble. Among them: unregulated hedge funds, housing, foreign trade uncertainty, the need to finance the nation's huge trade deficit, Middle East unrest and the potential for terrorism.

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Roubini is a sensible bear operating as a mainstream economist.

We need more like him

Looks like we have a new HPC hero.

From Mr Roubini's "global economics blog":

"Of course, the message from the Toll Brothers and Countrywide is like the proverbial canary in the mine that is reflective of an ongoing rout – calling it slowdown or slump is a misnomer by now" B)

Roubini Blog

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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