Roubini warns "party" in risk assets may end badly (economy given up to 6 months before correction)

MarketWatch ^ | Nov. 4, 2009 | Nick Godt

[AngieGal]

Markets, be they stocks, emerging markets or commodities, have rallied too far, too fast because the global economy will experience an anemic recovery rather than the hoped-for V-shaped recovery, New York University economist Nouriel Roubini said on Wednesday.

Roubini, who became famous for predicting the unraveling of the housing market and the credit crisis, said that the current "party" can continue for another six months.

But it will eventually end badly, he warned, as much of the rise in asset prices since March is yet another bubble created by a huge pool of global liquidity.

"I'd argue that rally has been too much, too fast. If we have a V-shaped recovery, then it's justified and assets can rise further. But I believe we'll have U-shaped recovery, in which case those assets could move sideways or they could correct," Roubini said in a presentation at the Inside Commodities conference held at the New York Stock Exchange.

[tongass kid]

Jim Roger's responses to NR is on the Bloomberg page.

[AngieGal]

Thanks for the link. I listened to it.

I’m hoping Roubini is wrong, but am more inclined to side with him. I think a bubble could easily be created from all the quantitative easing that we’ve been doing lately.

Also, I think the Plunge Protection Team may have played a significant role in this recent rally, driving prices a good bit higher than they would be otherwise. Thoughts?

[tongass kid]

About 8 years ago an investment board that I sit on began placing a portion of the portfolio with Bill Gross at Pimco. Over this last year some of the Pimco products have performed well. For another perspective I would suggest you read his Nov stuff on the Pimco home page, it is free and he is one of the best. tk

[tongass kid]

NR responds to Roger's remarks at the SHTF home page. ts