Roubini Says Stocks Will Drop as Banks Go ‘Belly Up’

"“The stock market is a bit ahead of the real macroeconomic and financial news,” Roubini, a professor at NYU’s Stern School of Business and the chairman of consulting firm Roubini Global Economics, said in an interview with Bloomberg Television in London today. “We’ll have some major banks going belly up that will need to be taken over.”

The global equity rebound in March that sent the Standard & Poor’s 500 Index to its best monthly advance in 17 years is a “bear-market rally” and U.S. Treasury yields will “remain relatively low” as investors flock to the safest assets, Roubini said. Treasury Secretary Timothy Geithner’s new plan to remove toxic debt from financial companies won’t be enough for insolvent banks, he said."

Barrons: Trades betting on BX

""AH," THE OPTIONS TRADER said as he surveyed the market before it opened. "I love the smell of greed in the morning. Smells like … a normal market."
Perhaps Stephen Schwartzman, chief executive of Blackstone Group (BX), a private-equity firm, agrees. Even if he doesn't, the options market does, which suggest shares of this somewhat battered private-equity powerhouse are poised to advance.
Heavy were the bets made Monday that Blackstone would be a prime beneficiary of the federal government's plan to provide financing to qualified private investors who are willing to buy toxic assets from banks. For some particularly well-qualified investors, the U.S. government will provide $3 for every $1 invested.
With the Standard & Poor's 500 Index up about 6% on Monday, Blackstone's stock gained about 23%, and call volume, which is considered a bullish indicator, jumped to 10 times average daily volume. The stock is at its highest price since Jan. 9, even if it is now technically overbought, and may have trouble advancing beyond resistance at $8 to $8.50.
However, the outstanding options positions in Blackstone suggest that many investors expect the company's stock could trade as high as $12.50 by January."

Obama, Geithner Get Low Grades From Economists

WSJ: Obama, Geithner Get Low Grades From Economists
U.S. President Barack Obama and Treasury Secretary Timothy Geithner received failing grades for their efforts to revive the economy from participants in the latest Wall Street Journal forecasting survey.

Economists Give Obama an "F"

In striking contrast to President Obama's popularity with the public, a new Wall Street Journal survey of economists gives the president and his treasury secretary failing grades. WSJ's Phil Izzo and Kelly Evans discuss.
The economists' assessment stands in stark contrast with Mr. Obama's popularity with the public, with a recent Wall Street Journal/NBC poll giving him a 60% approval rating. A majority of the 49 economists polled said they were dissatisfied with the administration's economic policies.

The economists, many of whom have been continually surprised by the depth of the downturn, also pushed back yet again their forecasts for when a recovery would begin. On average, they expect the downturn to end in October. Last month, they said the bottom would arrive in August. They estimate that U.S. gross domestic product will continue to contract in the first half of this year, with slow growth returning in the third quarter.

Economists were divided over whether the $787 billion economic-stimulus package passed last month is enough. Some 43% said the U.S. will need another stimulus package on the order of nearly $500 billion. Others were skeptical of the need for stimulus at all.

However, economists' main criticism of the Obama team centered on delays in enacting key parts of plans to rescue banks. "They overpromised and underdelivered," said Stephen Stanley of RBS Greenwich Capital. "Secretary Geithner scheduled a big speech and came out with just a vague blueprint. The uncertainty is hanging over everyone's head."