I am just a simple financial consultant trying to do my best for my clients, but it looks like Nouriel Roubini is late to the game on this prediction. Below is excerpt from the latest “alert” message from Dr. Roubini. I’ve been talking about this for some time now. (Emphasis in the original.)
Earnings per share (EPS) of S&P 500 firms will be in the $ 50 to 60 range, but they could fall to $40. The price earnings (P/E) ratio may fall in the 10 to 12 range in a U-shaped recession. If earnings are closer to 50 or the P/E ratio falls to 10 then the S&P could fall to 600 (12 x 50 or 10 x 60) or even to 500 (10 x 50). Equivalently the Dow (DJIA) would be at least as low as 7000 and possibly as low as 6000 or 5000.