Dr. Doom Warns of Potential Hard Landing for Global Markets
Nouriel Roubini’s Warning
• Crypto critic and economist Nouriel Roubini warns that the stock market is in for a big surprise this year.
• He believes inflation will not fall as much as central banks expect, leading to a potential hard landing or financial instability.
• The markets are expecting a short and shallow recession which will lead to rate cuts, however Roubini warns of a potential correction first.
Dr Doom’s Pessimistic Outlook
Nouriel Roubini, also known as ‘Dr Doom’ due to his pessimistic outlooks on the economy, has recently spoken out about the current state of the markets. In an interview with Bloomberg Television, Roubini warned that inflation would be harder to bring down than central banks currently expect and that they may end up raising interest rates further. This could mean either a hard landing or financial instability for global markets in the near future.
The equity markets have been showing signs of complacency in regard to inflation levels dropping and central banks cutting rates. Investors are betting on a market recovery prompted by rate cuts after what is expected to be a short and shallow recession later this year. However, Roubini cautions that there may be a correction before any rate cuts occur.
Central Banks’ Dilemma
Roubini says that central banks will face a difficult decision if inflation does not fall as expected: They can either raise interest rates more and risk economic disruption or keep them steady but risk anchoring inflation expectations too low. Either way it could spell trouble for global markets in the coming months.
It remains to be seen whether or not Dr Doom’s predictions come true but investors should certainly be aware of the risks associated with rising inflation and extended periods of low interest rates; both of which could have serious implications for global economies in 2021 and beyond.