"It's not going to be a short and shallow recession, it's going to be severe, long and ugly," said "Dr. Doom"
Economist Nouriel Roubini, who correctly predicted the 2008 financial crisis, sees a "long and ugly" recession in the US and globally occurring at the end of 2022 that could last all of 2023 and a sharp correction (40%) in the $S&P 500 Index (.SPX.US)$. ![]()
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Roubini said that people expecting a shallow US recession should be looking at the large debt ratios of companies and governments.
As rates rise and debt servicing costs increase, many zombie institutions, zombie households, corporates, banks, shadow banks and zombie countries are going to die, so we'll see who's swimming naked.”
Even in a plain vanilla recession, the S&P 500 can fall by 30%, in a real hard landing, it could fall 40%."
—— said Roubini, chairman and chief executive officer of Roubini Macro Associates.
Roubini expects a 75 basis points rate hike at the current meeting and 50 basis points in both November and December. That would lead the Fed funds rate by year's end to be between 4% and 4.25%. However, to fight with persistent inflation the Fed will "probably have no choice" but to hike more, he said, with funds rates going toward 5%.
Once the world is in recession, Roubini doesn't expect fiscal stimulus remedies as governments with too much debt are "running out of fiscal bullets." ![]()
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His advice for investors: "You have to be light on equities and have more cash." Though cash is eroded by inflation, its nominal value stays at zero, "while equities and other assets can fall by 10%, 20%, 30%." ![]()
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Source: Bloomberg
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102684281 : Dr doom... not time to panic...
Ixy The Cat : Roubini is exactly on point. The Fed does not have the nerve to get serious and tackle inflation aggressively like Volker in the past. Now way is it prepared to raise beyond 100 basis points and higher, so instead of a recession the threat of a stagflation is real.
Putu Roy : this is BULLISH
Passive Investor : exactly... with my decades of investment experience, I worked with Goldman Sachs at CIO .
.also Head of Fed... I do concur it's doom's day for U.S equities!