Pros Say: We’re in Middle of U-Shaped Recession
Global stocks were mixed Tuesday after the major selloff the previous day. Markets have been shaken by concerns that the global financial sector woes are deepening. A Wall Street Journal report suggested the Obama administration may set up investment funds to purchase bad loans and other distressed assets.
Experts share their views with CNBC on the overall health over the global economy and financial sector.
A U-shaped Recession
Aggressive policy decisions need to be undertaken to avoid L-shaped stagnation, says Nouriel Roubini, chairman of RGE Monitor. He tells CNBC thatwe are currently in the middle of a U-shaped recession.
Global Cooperation Needed
The global world needs to be on the same page, where everyone understands the severity of the financial situation, so all can act together, says Jack Bouroudjian, chairman of Capital Markets Technology. He tells CNBC that the European central bank is "behind the curve."
S&P 500 to Fall to 500 in 2009
"I don't think that we're near a bottom here. This recent market selloff has been caused by completely uncontrolled, reckless government spending and the fact that the U.S. government is systematically shortening the duration of the debt issuance and they are setting up a huge risk of a spike in the financing costs," David Karsbol from Saxo Bank said.
"We are headed towards new lows and we are maintaining that the S&P 500 will reach 500 this year unfortunately," he added.
Governments Need to Take Radical Steps
"Governments are unwilling to take the radical steps necessary, which includes more public participation in the banks," Paul Mortimer Lee from BNP Paribas said. "Governments don't want to bite the bullet right now for a variety of reasons and that means that the economy remains broken."
Not Escaping Nationalization
Despite word from the U.S. that nationalization is not going to happen, Michael Yoshikami, founder, president & chief investment strategist at YCMNET Advisors and David Chon, partner of Atlas Capital Management think otherwise.
Better to Let Financials Fail
The U.S. bailing out troubled financials is not going to remove systemic risk. In fact, it is making the problem worse, says Jim Rogers, author & international investor. He tells CNBC why it is better to let financials fail.
Zombie Banks vs. Good Banks
Until banks can get healthy again, markets will continue to spiral downwards, says Jack Bouroudjian, chairman at Capital Markets Technology.
Nationalization Debate is Moot
The debate isn't about nationalization anymore, says Nouriel Roubini, chairman of RGE Monitor. He tells CNBC that the real discussion is whether banks should be wholly or partially nationalized.
Not a Good Time to Up Exposure to HSBC
Now is not a good time to increase your exposure to HSBC as uncertainties regarding the bank's profitability remains, says Alex Wong, director of asset management at Ample Capital.
HSBC's Capital Raising is a Prudent Move
HSBC's move to raise capital is a prudent thing to do, believes Nick Lord, associate director of regional banks at Macquarie Securities. He tells CNBC that the bank is not in the same sort of trouble that its Western peers are in.
E. Europe's Problem is Worse Than Subprime
Eastern Europe's problem is a greater weight on Western European nations than sub-prime is on the U.S., believes Jeffrey Halley, senior manager, FX trading at Saxo Capital Markets.
The BoE's Options
The Bank of England will slash rates and move towards quantitative easing, predicts Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors.
Asia Will Not Lead World Out of Recovery
It will take much longer for Asia to recover than the world hopes, says Kirby Daley, senior strategist at the Newedge Group.
Crisis Still in Freefall
"Clearly we're not much closer to a resolution of the financial difficulties," Neil Dwane from RCM told CNBC Tuesday. "The world has hit an air pocket that we're still falling through," he added.