“He’s not a credible analyst. Every time it was a bear market rally he said it was the beginning of a bull and he got it wrong.”
-Nouriel Roubini on CNBC’s James Cramer

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Them’s fightin’ words:

“CNBC’s Jim Cramer has another feud on his hands.

Just weeks after “The Daily Show” host Jon Stewart took Cramer to task for trying to turn finance reporting into a “game,” famous bear economist Nouriel Roubini criticized Cramer on Tuesday for predicting bull markets.

“Cramer is a buffoon,” said Roubini, a New York University economics professor often called Dr. Doom. “He was one of those who called six times in a row for this bear market rally to be a bull market rally and he got it wrong. And after all this mess and Jon Stewart he should just shut up because he has no shame . . .”

Cramer recently wrote in a blog that Roubini is “intoxicated” with his own “prescience and vision” and said Roubini should realize that things are better since the stock market’s recent bottom in early March.”

Ouch.

In a battle between two pundits, you gotta go with the guy that has been dead right for 2 years. And the guy who has been dead wrong does not get the benefit of the doubt . . .

>

Sources:
Economist Nouriel Roubini lashes out at CNBC host
ROB GILLIES
APNEWS, Apr 8, 6:59 AM (ET)

http://apnews.myway.com/article/20090408/D97E86U80.html

Banks Finally Get a Little Breathing Room
James Cramer
TheStreet.com, 03/26/09 – 06:47 AM EDT

http://www.thestreet.com/story/10477761/1/banks-finally-get-a-little-breathing-room.html

Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

40 Responses to “Roubini vs Cramer Smackdown”

  1. John from Concord says:

    NR has been mostly right — and yes, sometimes shockingly so — for 2 yrs now, but I think he’s sensing that his proverbial 15 min are almost up and is trying ever harder to keep the publicity ball in the air a while longer. I mean, can you imagine someone like Krugman or Brad Delong picking a public fight with Cramer? Self-parody can’t be far away.

  2. Bruce in Tn says:

    http://www.foxnews.com/story/0,2933,513242,00.html

    Obama May Block Sun’s Rays to End Global Warming

    I don’t see why Obama couldn’t call both these boys to the oval office and just have them leave friends…after all it is small change compared with the other things on his plate….

    Our tax dollars at work…

  3. hipster says:

    BR, you better be careful siding with NR…CNBC may not have you on again…..and we need somoene who makes sense on that pump and dump network that tells the truth.

    On another note, Brian Wesbury has been on several times, you know, the guy who plays chief economist for Brain Trust or First Trust….anyways, he’s awfully bullish. We know how well his forecasts pan out, right?

    Be careful out there, this market is being manipulated by some big institutions…one technician I follow, Marty Chenard, said this is a government induced rally…the net accumulation has reached records…for example, his analysis shows that the last bull market only had 2 of these events and this little rally has had more than 6 in the last 15 days.

    Someone is trying very hard to induce us into thinking that this thing is over….i’m skeptical.

  4. investorinpa says:

    The truth is that listening to big egos like Cramer and Roubini duking it out is as fun as counting the number of grits on sandpaper. They are both publicity hounds. A verbal tiff gets them both on TV and keeps their name going. If this world were truly about accountability, Cramer would have been kicked off the scene long ago and Roubini would be duking it out with someone else who has called the market right, which would be a much more balanced battle.

  5. rktbrkr says:

    CNBC is simply an entertainment channel, Cramer is their prime time master of ceremonies – he’ll say anything to grab a headline. Kudlow is an agent of the Republican National Committee, the girls are cheerleaders. Fastmoney has slowed to a crawl without Dylan, I think he was just sending out too many negative vibes for their comfort – maybe he made a negative comment about GE and had to be expunged.

  6. rktbrkr says:

    Analysts with a bearish perspective definitely get their air time trimmed back. It was fun watching Dan Niles, the top rated tech analyst forever, catch Maria unprepared with comments about the “depression” – she kept trying to interrupt him. He won’t be back for a while!!!

  7. some_guy_in_a_cube says:

    Cramer is in the long American tradition of carny-barkers. His economic role is to get the rubes into the tent.

    Roubini jumped-the-shark for me last fall when he cheered the prospect of an Obama presidency because it would include people like Summers and Geithner, whom he viewed as “excellent choices”.

  8. Baille Beag says:

    I used to hang on every word uttered by Dr. Roubini, but he does seem to love the limelight a little too much lately.

    This limelight-loving lady is getting a WSJ smackdown this morning:

    http://online.wsj.com/article/SB123922644853002669.html

  9. I have not chosen sides . . . But I will admit to being amused by the whole contretemps.

  10. plantseeds says:

    i agree with several of the posts above, I also think they’re both FOS, and personally, and if i had to blindly follow one or the other into the dark, i’d much rather than go with the buffoon who actually manages money, than the self-absorbed one who got it right “lately” but has never actaully done it (managed money), just talks about it. Speaking of lately, i believe that the jury is still out on the bear market rally vs. bull market rally….no? 25% off the lows and still a runnin’.

  11. Moss says:

    Talking about Maria it was comical when she totally blew the earnings announcement on Alcoa.
    Saying the results were better than expected numerous times until later corrected.
    In reality the loss was more than expected. A loss of .39 vs. the expected loss of .36.

    This slip up is indicative of the incrediable pandering that domintaes at CNBC.

    Buyer beware.

  12. john from concord is correct, roubini, while dead on for the last few years, is displaying all of the signs of a starlett who senses that the offers are slowing down and needs to stay in the media.

    calling out Cramer is a layup for attention and publicity…it is the Wall Street equivalent of Paris Hilton getting out of a limo without underwear on.

    Roubini’s routine is getting stale and the permabears are starting to look more like the permabulls each day.

    speaking of 15 minutes, anyone heard anything about Elaine Garzarelli recently?

  13. Eric Davis says:

    When did Cramer become an Analyst?

    Couple of cats fighting in a burlap sack, this one.

  14. Marcus Aurelius says:

    Cramer and his rolled-up sleeves (without the biceps to back it up) and tie reminds me of Matt Drudge and his neo-noir, hard-boiled, ’30′s reporter look. Roubini, at least, wears a suit. Dressing like a fantasy personage makes one a clown among professionals, and anyone doing it should be taken as such.

  15. OT – Any take on WFC?

  16. rktbrkr says:

    WFC doesn’t pass my sniff test, I think we’ll see commentary about MTM and reserves buried in their 10Q under the headlines. All their exposure in second morts, HELOCs and Wachovia (Golden west) pick a pays out west where real estate prices have tanked.

  17. dead hobo says:

    Based on the two links above, Cramer appears sensible and Roubini comes across as someone who is inflated with a sense of self importance. Cramer provided a reasoned argument. Roubini just called Cramer names and sounded a little narcissistic.

    I went to Roubini’s site to find out more details and it’s a pay site. Screw that.

    I understand Roubini has been outspoken about the current troubles. Has he said anything about the recovery? Will there be one soon? Ever? How will it look? What will the world economy look like in 1,2,3,5 years? For him, what’s Act II?

  18. cttfinder says:

    For sure, Cramer has been wrong a lot but Roubini has been wrong a lot too over the years and has an ego the size of the state of Texas. He arrogantly proclaimed the S&P 500 would sink to 600 when it broke below 700. WRONG!!!!

  19. rktbrkr says:

    Do you think we’ll have financials reporting strong 1Q profits while accepting additional TARP funding?

  20. franklin411 says:

    You have to take each for what they are:

    Cramer is a short term hedge fund guy. He’s got a great sense for what’s happening in the market right now and for the next few weeks. He’s not always right, but his calls have utility in the near term.

    Roubini is a long term soothsayer. He had a great sense for big macro trends, but you couldn’t use those in your everyday trading because he’s been saying the same thing forever and a day. He was finally correct, but if your portfolio depends on the timeliness of Roubini’s predictions, you’re going to lose money.

    Who do I listen to now? I listen to Cramer. Why?

    Because the naysayers are good at telling us what’s wrong when we’re going down, but they NEVER call it right when things turn. Roubini is not the voice to listen to at this point in time; Cramer is.

  21. BG says:

    Apparently, there are some here who have confused entertainment with serious financial analysis.

    Cramer obviously falls into the former. I would hope no one invests their money based upon anything this guys says.

    It does concern me that he is probably taking advantage of some naive young people who want to invest in American who inadvertently are learning the cruelest investing lesson of all. The rest of us should have learned this lesson a long time ago. We should already know better.

    If one takes Cramer seriously then he must also simultaneously label him as a snake-oil salesman. Me, I always considered him as pure entertainment. I mean the horns, buzzers and antics. How can anyone miss that? Wake up!!

    Furthermore, if Cramer ever got into any kind of legal trouble, that would be his primary defense; that this was all for pure entertainment and never intended to be construed as serious investment advice.

  22. Mannwich says:

    WFC beat. Depression over. Story over. Let’s all move along please. Life is great again.

  23. sunny45 says:

    Cramer and CNBC represent why majority lost 40%+ last year. The very fact he is still on the air tells me that things are NOT good as they made appear to be in this Fed induced rally. The latest 1Q result from WFC announcing profit while getting TARP is a hilarious joke but almost none of MSM even raise the contradiction or challenging it.

  24. Chubby Davis says:

    When Cramer has those sleeves rolled up….Slim and I , just can’t control ourselves!!

  25. Mannwich says:

    I’ll be slowly liquidating my remaining longs into this rally if it continues. Will probably stay in cash for a while, slowly add to some shorts and TIPs (retirement fund). Expect more bogus financial “earnings” reports in the coming days/weeks. Gotta keep goosing the market.

  26. franklin411 says:

    Sunny,
    Cramer said to sell the market on October 6 2008, when the DJIA was 10323.

    President Obama said to buy the market on March 3 2009, when the DJIA was 6764.

    If you listened to Cramer, you did not lose 40%. If you listened to Obama as well, you made a hefty chunk.

    http://www.msnbc.msn.com/id/27045699/

  27. rootless_cosmopolitan says:

    “For sure, Cramer has been wrong a lot but Roubini has been wrong a lot too over the years and has an ego the size of the state of Texas. He arrogantly proclaimed the S&P 500 would sink to 600 when it broke below 700. WRONG!!!!”

    Roubini said according to Bloomberg.com:

    “Roubini Says S&P 500 May Drop to 600 as Profits Fall (Update2)

    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. ”
    (Reference: http://www.bloomberg.com/apps/news?pid=20601087&sid=apvoCvLuZJkg

    cttfinder, how do you know already that this was just an arrogant claim by Roubini and that he is wrong, although we are just in April? Can you tell me your secret?

    Are Roubini’s assumptions for the S&P 500 at 600 call unreasonable?

    rc

  28. Smacktle says:

    Why would anybody in his right mind listen to Creamer about anything?!

  29. HCF says:

    @ franklin411:
    >President Obama said to buy the market on March 3 2009, when the DJIA was 6764.

    Every President, by definition of his job, HAS to be a cheerleader for the USA and its economy. Let’s see if the “Obama bottom” holds for the rest of the year.

    Now if the President came out said “This economy is screwed, the market overbought and overvalued. Short now!”, then that would truly be of note =)

    HCF

  30. TPC says:

    I’ll give Cramer credit for one thing: he is one helluva salesman. The guy pumped that “rant” as if he called this whole debacle. What people forget is that he became bullish just two weeks later when Bernanke did his bidding and cut rates. And he remained bullish into 2008. He called the bottom 3 times in 2008. At one point in September penning a brilliant piece titled “The bounce means the crash can’t happen”. Ha. But don’t forget, he called all of this in his “rant”. And people eat it up….Brilliant spin master….

  31. dss says:

    The year is yet young! Roubini may very well be proven right. It is impossible for any commentator to make an accurate on the nose prediction of where the S&P will be, but I sense for a few perfectionists that unless the S&P hit 600 even, they would call him arrogantly wrong. All traders work within a frame of prices, not absolutes.

    Cramer has made so many wrong calls since he became famous in 1997ish that one would certainly be in the poor house if you took his calls seriously. The few things he has gotten right will never in one thousand years make up for the horrible calls he has made.

  32. rktbrkr says:

    Mr Mortgage blog is back in operation, it’s my second fav after this, of course! He has a new link

    http://thefieldcheckgroup.com/blog/

    he has a couple of very interesting observations.

    #1 there are 50% more Alt As than subprimes in CA and their avg loan val is twice that of subprimes, they are lagging subprimes, their rollovers are just starting in earnest, everything else is similar regarding defaults.

    #2 defaults are determined by the owners underwaterness not FICO or anything else

    #3 Wells fargo is raising their HELOC rates from 4% to 10%, that should bring things to a head pretty quickly

  33. DiggidyDan says:

    I trust Roubini to be right about economy as a whole (because he was), but I wouldn’t trust either of them for investment advice. Actually, I don’t trust anyone; I pick things to invest in myself. One reason not to trust Roubini for investment advice is the fact that even though he is predicting the downfall of the economic system and eventually S&P 600 this year he is personally still allocated 100% in equities because “equities do better in the long run” and belief in the inability to time the market.

    That reminds me a lot of this past TBP discussion:
    http://www.ritholtz.com/blog/2009/01/vocabulary-problem-cognitive-dissonance/

  34. Boom2Bust.com says:

    This call by Cramer still sticks out in my mind. Back on July 30, 2008, he said:

    “I am indeed sticking my neck out right here, right now, declaring emphatically that I believe the market will not revisit the panicked lows it hit on July 15, and I think anyone out there who’s waiting for that low to be breached is in for a big disappointment and [they’re] missing a great deal of upside… Stop waiting, buy the next dip because I think it might be the last big one.”

    For the record, the Dow Jones Industrial Average closed at 10,962.54 and the S&P 500 at 1,214.91 back on July 15, 2008.

    As I write this, the Dow is trading at 8,023 and the S&P 500 at 848.

    Plus, you gotta love Jimbo’s latest call as well:

    “Jim Cramer Says Depression Over, Expects New Bull Market”
    http://www.boom2bust.com/2009/04/06/jim-cramer-says-depression-over-expects-new-bull-market/

  35. drollere says:

    after the stewart “interview”, the fasb took pity on cramer and eased the rules in his favor. profits bust out all over!

    as for roubini/cramer … i never take sides in a cat fight. after all, they are both cats.

    however, cramer posts his investment performance on his web site. i did a study of his results about six months ago. the results (in proportional dollars):
    he made $100 by buying stocks that went up.
    he lost $100 by buying stocks that went down.
    he lost $100 by selling stocks that went up.
    he lost $400 by not selling stocks that went down.

  36. BG says:

    Well….what about that Wells Fargo number?

    Maybe that was supposed to be a confidence builder; but, all it did for me was make me wonder WTF is REALLY going on!

    There is such a lack of any credibility to anything financial you hear or read, I think this market will flounder around for years. And people who think they have it all figured out will lose millions.

    There is no way I could ever allow myself to commit any kind of serious money to this market. One day, it’s apocalyse now and the next day, earnings are going thru the roof. Somebody’s lying somewhere. This is like the freaking wild, wild west.

  37. rktbrkr says:

    Bonding… With the massive widening in corporate bond spreads last fall, the economists’ model predicts industrial production will fall another 17% by the end of the year, and the economy will lose another 7.8 million jobs on top of the 5.1 million its shed since the recession began.

    (From WSJ)

    By JUSTIN LAHART

    New research shows corporate bonds have been far better at predicting where the economy is headed than anyone thought. Unfortunately, that suggests the economy is going to get much worse.

    In the fall of 2007, before the economy began to falter, corporate bond prices were signaling that all was not well. The spread between corporate bond yields and Treasury yields, which had begun to widen amid that summer’s mortgage woes, showed little improvement even as the Dow Jones Industrial Average clocked record highs.

    It wasn’t the first time bonds had signaled something was awry. One of the head scratchers of early 2000 was why stocks were surging when high-yield bonds were wavering. In retrospect, the bonds had it right.

    Bond investors are intensely focused on companies’ ability to pay down debt. If they see signs business is slowing, they demand higher returns, and thus higher bond yields. Widening corporate bond spreads can also reflect disruptions in the credit supply — say because banks are mired in bad mortgages — that eventually sap the whole economy. Finally, widening spreads can induce companies to cut back on expansion plans, which also has economic consequences.

    Bonds’ forecasts haven’t always seemed to come true. Many corporate bond indexes showed spreads widening significantly during the 1998 Russian debt crisis, and yet the economy soldiered on.

    Such false signals may not be due to corporate bonds themselves, however, but the way corporate bond indexes are constructed. The bonds in them tend to have much shorter times before they will mature than the 10-year Treasurys their yields are usually compared with — which makes for a faulty comparison.

    To compensate for that, economists Simon Gilchrist and Vladimir Yankov at Boston University, and Egon Zakrajsek at the Federal Reserve constructed credit spreads over the 1990-2008 period from monthly price data on the corporate debt of about 900 U.S. nonfinancial companies. They divvied up the bonds based on both expected default rates (a more timely measure of quality than ratings) and time to maturity.

    In a forthcoming paper in the Journal of Monetary Economics they show that spreads on low to medium-risk corporate bonds, particularly those with 15 or more years until maturity, predicted changes in the economy phenomenally well, forecasting the ups and downs in both hiring and production a year before they occurred. Since writing the paper, they extended their analysis back to 1973 and found bonds’ predictive ability still held.

    It would be better for everyone if it doesn’t hold going forward. With the massive widening in corporate bond spreads last fall, the economists’ model predicts industrial production will fall another 17% by the end of the year, and the economy will lose another 7.8 million jobs on top of the 5.1 million its shed since the recession began. Ouch.

    Write to Justin Lahart at justin.lahart@wsj.com
    Copyright 2

  38. The Depression’s over? Damn, and I missed it. When was it? Did anybody TIVO it?

  39. rktbrkr says:

    Maria-watch. She just asked rhetorically if investors have “missed the best opportunity in 80 years”! Time for a panty change next commercial!

  40. kmikev says:

    I would be interested to know if there is a running track record of pundits who got it “right” on the way down and the way up, or vice versa? I would imagine that there are inherent biases in one’s thought process which make it extremely unlikely. Timing is a tricky animal and peaks and troughs can only be proven so in hindsight.

    The market is a discounting tool. It seems like the naysayers are looking for an all clear sign in order to get bullish. The problem is, the all clear doesn’t happen until well after the fact.

    I’m not taking any sides here. I would, however, argue against Roubini being in front of the ultimate market low.