Major banks can generally be relied upon to issue the rosiest forecasts about the economy and financial markets that reality permits.
The fact that the banks maximize their profits in those rosy scenarios probably has at least a bit of influence on the forecasts.
But not Bank of America. It’s giving Nouriel Roubini, nicknamed Dr. Doom for his pessimistic predictions, a run for his money.
All the hubbub about green shoots in the economy and credit markets has no more validity than the constant drumming early in the financial crisis of the idea that the rest of the world had decoupled from U.S. woes
“Like last year’s ‘Decoupling’ theme that global market performance could un-tether itself from the problems in the U.S., ‘Green Shoots’ underlying premise, a quick return to normalized credit markets and normalized earnings, rests on a shaky fundamental foundation and an overly optimistic view of global economics,” Bank of America credit strategists say in a report for customers.
Sluggish economic growth and “unintended consequences” of the government’s efforts to ease the financial crisis will produce a “protracted credit cycle,” the report says, according to Bloomberg. That probably means a high level of defaults through 2016.
Roubini couldn’t agree more.
"People talk about a bottom of the recession in June, but I see it more like six to nine months from now," he told CNBC. "The green shoots everyone talks about are more like yellow weeds to me."
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