When Nouriel Roubini, Chairman of RGEMonitor.com aka “Dr. Doom” speaks, the market listens.
In a speech last week, Nouriel’s commentsabout the markets were misunderstood, helping the S&P to a 1% rally that morning.
So what does this bearish economist have to say about the markets?
Maria interviewed Nouriel on Closing Bellthis afternoon.
Roubini said we’ll have a V-shaped recovery, seeing growth back to 3%. It’s going to feel like a recession even though we’re technically out of the recession.
Currently, the jobless rate in the U.S. is at 9.5%, Robuini said unemployment rate may hit 11% by the end of the year.
We saw a freefall in the global economy in the fourth quarter (of last year) and first quarter. Roubini said we’re no longer in that freefall and we’re closer to a bottom. We’re not going to have L-shape depression. But between a L-shape depression and V-shape recovery, Roubini’s view is “it’s a sluggish U-shaped recovery but may go into a W double-dip, if we don’t fix the fiscal and problems in the economy.”
Maria:“Do you think the administration needs to come out with another stimulus package?”
Roubini:“They may need another one towards the end of the year. They want to give it time to let this one to work work.”
Roubini sees another package $250 billion sometime early next year. If it’s too small, it’s not going to make a difference but if it’s too large the bond market is going to panic. But we need another one especially unemployment is above 10%, Roubini added.
In terms of who will recovery from this slow down first? Roubini said it would be the United States when it comes to the advanced economies compared to Euro zone and Japan. As for emerging markets Roubini said China and India is in front of the pack.
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