Three big stories out this afternoon:

1)  Nouriel Roubini says the recession could be over by the end of this year.  Bloomberg reports:

July 16 (Bloomberg) — The U.S. economy may pull out of a recession by the end of the year and a second stimulus package would help broaden the recovery, said Nouriel Roubini, the New York University professor who predicted the financial crisis.

“The free fall of the economy has stopped,” Roubini said at a Chilean investors’ conference in New York. “The economy is still contracting but slowly.”

To help shore up growth, a second spending package may be needed by late 2009 or early 2010 totaling between $200 billion and $250 billion, Roubini said.

“We should continue with fiscal stimulus and we might need a second one,” Roubini said. While the worst of the crisis is over, there’s still a “meaningful amount of weakness” in labor markets, industrial production and housing, he said.

China, India and Brazil are among economies that may recover faster once the global economy picks up, Roubini said. He also mentioned Chile, Uruguay, Colombia and Peru as countries better-positioned to grow, in an interview at the conference. Countries in emerging Europe such as Hungary, Bulgaria and Ukraine face the biggest challenges, he said.

It sounds to me like Roubini is reiterating what he has been saying for a long time.   That is, the economy remains weak and recovery will be tepid.  There is no doubt that the NBER will call the technical end of the recession at some point in the 3rd or 4th quarter so there is no news there.  It’s time to focus on the recovery now.  The market supposedly rallied on this news.  I am not so sure it is news….

2 ) IBM reported better than expected EPS, raised their full year guidance and missed on revenues.  This sounds familiar to regular readers.  The company tacked on a phenomenal 2.3% to gross margins as they cut costs more quickly than analysts expected.   The top line growth was weaker than analysts expected and should be the true focus of investors.

3) Google reported in-line revenues and better than expected EPS.  They reported year over year revenue growth of 3% which has to make investors wonder whether they deserve their trailing multiple of 32 or their forward multiple of 18.  Are Google’s days as a high growth company gone?

Looking forward to tomorrow morning – we get earnings from Bank of America, Citi and GE.  I have reviewed the estimates and run a thorough analysis of each.  The estimates for all three look absurdly low.  The “better than expected” earnings trade is still on….

Update – CNBC is now reporting exactly what I said above.  The Nouriel Roubini news that sparked the rally is in fact no change in his prior view.   This was not a news event at all, but CNBC and its reporters will leach onto anything that sounds even remotely positive – even if it involves completely misconstruing someone’s comments.  Roubini’s full retort can be found on his site here.