The Rise of the Permabears ?

There is a an interesting — and somewhat odd — article in today’s NYT titled Economic Pessimists Gain Cachet (originally headlined:  “The Rise of the Permabears“).

Why odd? Well, the 3rd sentence describes permabears as “a species that has long flourished on the outer margins of the financial industry but rarely inside mainstream banks.”

That is a weirdly incorrect statement. Two small, obscure investment houses — Morgan Stanley and Merrill Lynch (ever heard of ’em?) had 3 well known permabears in senior research positions. Stephen Roach was the chief economist at Morgan, while Merrill had David Rosenberg as their chief economist and Richard Bernstein as chief market strategist. All 3 can be described as Ursa Majors — Roach fled the US for Asia for 5 years, while both Bernstein and Rosenberg fled Merrill.

Hence the phrase “rarely inside mainstream banks” is totally wrong.

Other than that error, the rest of the article, a discussion of several well known bearish European macro strategists, is worth reading. It covers Albert Edwards of Société Générale (no stranger to Big Picture readers), Bob Janjuah at Royal Bank of Scotland, and Raoul Pal, formerly of Goldman Sachs.

I suspect what is confusing the author is the inherent bias of the analysts that cover individual company stocks. Perhaps their permabull forecasts, typically in the service of whoring for investment banking business, skews the MSM perception of most analysts.

Or not.

I have no idea howTF anyone could miss the Morgan/Merrill holy trinity of bearishness, so I am just spitballing here . . .

Its tough to squeeze out much of a contrary indicator in this article. The author seems to have forgotten the 2 biggest shops’ biggest bears; it is not on the cover of a mainstream non-business publication (NYT Section B – Page 1). If anything, it tells us that we are now 10 years deep into the secular bear market that began in 2,000, and that writing about the bears is no longer considered the fringe.

I can conclude from the spate of Bear focused articles only that we are closer to the end of the bear market than the beginning . . .


The Bulls, The Bears, & the Media (January 26th, 2008)

McKinsey: Equity Analysts Are Still Too Bullish (June 2nd, 2010)

Reviewing — and Roasting — the Perma-Bears (June 11th, 2010)

The Men Who Would Be Roubini . . . (July 8th, 2010)

Economic Pessimists Gain Cachet
NYT, August 9, 2010

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