It must be some sort of indication of where we are in the economic cycle when major publications start doing big stories on the people who make the most pessimistic predictions. Anyone read the “Dr. Doom” profile of NYU economist Nouriel Roubini in the New York Times magazine over the weekend? It reminded me of Fortune‘s recent cover on Oppenheimer & Co.’s Meredith Whitney, “The woman who called Wall Street’s meltdown.”
Both Roubini and Whitney were ahead of the pack in talking about the severity of problems in housing, banks, and the economy more broadly. They remain two of the loudest voices with the view that the end is nowhere in sight. And that has made them very popular. From the Times:
Roubini, a respected but formerly obscure academic, has become a major figure in the public debate about the economy: the seer who saw it coming. He has been summoned to speak before Congress, the Council on Foreign Relations and the World Economic Forum at Davos. He is now a sought-after adviser, spending much of his time shuttling between meetings with central bank governors and finance ministers in Europe and Asia. Though he continues to issue colorful doomsday prophecies of a decidedly nonmainstream sort — especially on his popular and polemical blog, where he offers visions of “equity market slaughter” and the “Coming Systemic Bust of the U.S. Banking System” — the mainstream economic establishment appears to be moving closer, however fitfully, to his way of seeing things. “I have in the last few months become more pessimistic than the consensus,” the former Treasury secretary Lawrence Summers told me earlier this year. “Certainly, Nouriel’s writings have been a contributor to that.”
And from Fortune:
Despite her unremitting bearishness, Whitney has probably never had better access to bank management. This is a bit surprising, given that being a renegade bank analyst used to be a one-way ticket to the unemployment line. (Just ask industry vets like Michael Mayo.) Nevertheless, Whitney has been landing one-on-one meetings with the likes of Bank of America CEO Ken Lewis, Merrill Lynch CFO Nelson Chai, and American Express CEO Kenneth Chenault.
Of course, a cynic might counter that it’s hardly shocking that a bunch of middle-aged male bank executives would spare time for a glamorous analyst with a megawatt personality and a jock-celebrity husband. “She always had more personality than anyone else,” offers former Commerce Bancorp CEO Vernon Hill.
But this explanation for Whitney’s influence and access is belied by her following among money managers who treat her latest research reports like gospel. “What I like is, she’s got conviction,” says Scacco. “She was early, she was right, and she wasn’t shy about saying it.” The most recent conference call Whitney hosted for Oppenheimer’s institutional clients drew as many callers – about 500 – as Exxon Mobil typically gets on its quarterly earnings calls.
There’s that theory that says magazine covers are contrarian indicators—by the time the MSM get around to writing about something, the peak has hit. I wonder what it means when we get so fascinated with the brashest naysayers. I’m guessing Whitney and Roubini would say it’s a signal that there’s a lot more pain to come.
Barbara!