Nouriel Roubini is out with his latest (surprise bearish!) outlook. He believes last week’s rally was one big bull trap that could sucker more bulls into the market before the inevitable reality sets in that things are no better now than they were two weeks ago. It’s hard to disagree with him:
So, in conclusion and caveat emptor for investors: Dear investors, do enjoy this dead cat bounce and bear market sucker’s rally; most likely most of you will jump the ship as soon as this rally loses its steam; and your attempt to jump ship will make the next round of the bear market bust even faster. Today short-selling covering is leading to a more pronounced bear market rally; at some point in the future the capitulation of investors trying to sell their equities at the peak of the latest bear market rally will make the next round of the bear market bust faster and more pronounced. So, don’t wait too long until you jump ship while the financial Titanic hits the next financial iceberg: you may get squeezed and crashed in the rush to the lifeboats.
As always, his analysis is thorough and rational. He is one of the few people who has nailed this recession from day one….