Roubini Says S&P 500 May Drop to 600 or below... possibly 36 month recession

[RedEarth]

March 9 (Bloomberg) -- The Standard & Poor’s 500 Index is likely to drop to 600 or lower this year as the global recession intensifies, said Nouriel Roubini, the New York University professor who predicted the financial crisis.

The benchmark index for U.S. stocks would have to slump 12 percent from last week’s closing level to meet his forecast. Roubini is assuming that companies in the S&P 500 will report profit of $50 a share this year and investors will pay 12 times that for equities.

“My main scenario is that it’s highly likely it goes to 600 or below,” Roubini said today in an interview at the Chicago Board Options Exchange Risk Management Conference in Dana Point, California. A level of “500 is less likely, but there is some possibility you get there.”

The S&P 500 has dropped 25 percent to 676.28 in 2009, its worst start to a year, following a 38 percent decline in 2008 that was the steepest annual retreat since 1937. In response to the U.S. recession that began in December 2007, the Federal Reserve cut its benchmark lending rate to as low as zero and President Barack Obama got congressional approval for a $787 billion economic stimulus plan.

“Even if you do everything right with fiscal and monetary policy, we’re still going to be in a recession through the end of this year and into next year,” Roubini said earlier during his speech at the options-industry conference. “The recession train left the station over a year ago, and it’s going to continue.”

http://www.bloomberg.com/apps/news?pid=20601103&sid=a0oeKmwfkr9k&refer=us

US Recession Could Last Up to 36 Months: Roubini
NOURIEL ROUBINI, ECONOMY, ECONOMIC DATA, RECESSION
Posted By: Jane Wells | Correspondent
cnbc.com | 09 Mar 2009 | 03:52 PM ET
The man who predicted the current financial crisis said the US recession could drag on for years without drastic action.

Among his solutions: fix the housing market by breaking "every mortgage contract."

"We are in the 15th month of a recession," said Nouriel Roubini, a professor at New York University's Stern School of Business, told CNBC in a live interview. "Growth is going to be close to zero and unemployment rate well above 10 percent into next year."

Echoing a speech he made earlier in the day, Roubini said he sees "no hope for the recession ending in 2009 and will more than likely last into 2010."

http://www.cnbc.com/id/29598949

[maxsolomon]

1. is Obama listening to Roubini?

he sure should be - rather than his team of advisers who rode in the stagecoach while their unregulated bonus geniuses drove the economy over a cliff.

[Myrina]

2. ... but according to most, we're 17 months in already ...

... so we're really halfway through.

Not even Houdini could make the gynormous mess that's appeared over the past 8 years vanish in an instant. Jus' sayin' ....

:hi:

[Dr.Phool]

3. I'm begining to think Roubini is an optimist.

He's "dead-on-balls" accurate in just about everything. In the middle of last year, he said that the S&P would bottom around 700 this year. It's already gone beyond that.

The sad thing is, he's the only one who saw it going this low.

[GoesTo11]

4. Big whoop. S&P is just 2 down days away from 600 as is.

If that's the low, the market's already dropped 55% or so of it's high and the low will be at 60% off it's high. If you've already lost $150,000, being $10,000 from the bottom would be great news.

I'm thinking S&P could easily reach 150. Then watch retirees and baby boomers start to feel the pain.

[RedEarth]

5. They're not feeling the pain already?