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‘Dr Doom’ warns of a new markets nosedive
5 Oct 2009Nouriel Roubini, dubbed Dr Doom after he predicted the financial crisis, today warned stock and commodity markets will fall as the slow pace of recovery disappoints investors.
“Markets have gone up too much, too soon, too fast,” said the New York University professor. “I see the risk of a correction, especially when the markets realise the recovery is not rapid and V-shaped, but more like U-shaped. That might be in the fourth quarter or the first quarter of next year.”
Stocks have surged around the world in the past six months as evidence mounts that the global economy is emerging from its deepest recession since the Thirties.
The FTSE 100 index climbed as high as 5173 last month having slumped as low as 3512 in March.
“The real economy is barely recovering while markets are going this way,” said Roubini. “Eventually markets are going to flatten out and correct to valuations that are justified.
“I see a growing gap between what markets are doing and the weaker real economic activities.”
The International Monetary Fund predicts the global economy will expand by 3.1% in 2010 led by growth in Asia after a 1.1% contraction this year.
Roubini said that is still “anaemic” and “very weak”.
Stock markets took a battering at the end of last week after a shocking surge in unemployment.
Reader views (6)
Mortage Broker sounds like he is trying to shoot anyone who questions the sustainability of the market rally because his income depends on the market going up. He is trying to talk up the market like any shill/salesman.
- Peter, London, 06/10/2009 04:55
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He is right but if they do half the worth of money then the prices will rise if not the actual value
- Rhodri, Cardiff,Wales, 06/10/2009 04:43
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Dear Mr Mortgage Broker N3
As someone who works in finance, I and many others of my profession, also predicted BUST back in 2004 like Mr Roubini. Why - because people in UK where living on plastic - buying over inflated properties and generally living beyond their means.
No disrespect to your profession but quite frankly, since when did estate agents or mortgage brokers really care if someone could honestly afford the property/mortgage they were undertaking? Both estate agents and mortgage brokers financially can't afford to allow any form of moral judgements into their line of work as if you don't make a sale you don't earn any money!!!!
As Roubini states, the mrakets are flyig high but the reality of the UK economic situation is dire. Businesses are still highly cash strapped, debts growing therefore, leading to more unemployment. Least not forget also, sooner or later our interest rates have to rise and cuts will have to be made to pay back our Governments astronomical debt mountain!!! HIgher interest rates, higher taxes, higher unemployment - listen to Roubini.
- Teresa, London, 05/10/2009 17:21
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Mortgage Broker dont shoot the messanger because you dont like the message!When Roubini talks markets listen. Becoming a world renouned economics Professor is not the same as obtaining a estate brokers 'qualification' if there is such a qualification...!
All but the most blindly optimistic could see that after the deepest and most costly recession since the 1930's the recovery would be slow if it is to be sustainable.
- Sam, London,UK, 05/10/2009 16:18
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The IMF are running with the fox and chasing with the hounds. In essence, I believe they are talking things up but haven't got a clue.
Nuriel Roubini is bang on the money - this is a ten years thing, beginning with Black October 2009.
- Ted, London, 05/10/2009 13:00
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Roubini predicted market crashes every year since 2004 - and - and kept predicting until it finally it happened. His predictions about oil prices were incorrect and his predictions about the S&P 500 were wrong too. mmm.... ist like throwing as many ingredients into the pot - your bound to pick up the taste of some of them!
- Mortgage Broker N3, London, England, 05/10/2009 12:42
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