Professor at New York University's Nouriel Roubini (Nouriel Roubini), predicted the financial crisis, said that the stock and commodity markets may fall in coming months, as the pace of economic recovery may disappoint investors.
"Markets have grown too much, too soon and too fast" - Roubini said in an interview in Istanbul on October 3. "I see the risk of correction, especially as the markets realize that recovery is not rapid V-shaped recovery, but more like a form of U. Correction can occur in the fourth quarter of this year or first quarter of the forthcoming ".
Shares soared in price around the world in the preceding six months, as the reinforced expectations that the economy out of the deepest recession in 1930. S & P500 index rose by 51 percent from its 12-year low, reached in March, while the European index Dow Jones Stoxx 600 rose by 48 percent. Euphoria contrasts sharply with the cautious tone of representatives of Big Seven. They said that projections for future growth "remains fragile".
"The real economy is only the beginning of recovery, while markets are going your own way" - said Rubin. If the growth keep you waiting, "ultimately markets will go in the artwork and will adjust to more reasonable valuations. I see a growing gap between the way the contemporary situation on the markets and weaker economic activity.
"Lifeless" restoration
The International Monetary Fund predicted that the world economy will grow by 3,1% in 2010, thanks to growth in Asia, after a decrease of 1,1% this year. This is still a "lifeless" and "very weak", said Rubin.
The report that industrial production grew weaker than expectations, and unemployment rose to 26-year high, to put pressure on U.S. stocks, which fell last week. All this fueled concern that economic recovery will be slower than expected.
Cost companies in the S & P500, at 19 times earnings for the last year, according to Bloomberg. This is the highest level since 2004.
Improvements in the U.S. economy is probably much weaker than is reflected in the dynamics of the stock sites, increasing the risk adjustment in assets, said last month the Nobel laureate in economics Michael Spence (Michael Spence). Investors in the markets "overrated" stabilization and growth in the world's largest economy, said Spence.
Creating bubbles
With annual minimum On March 9, the world rally in assets added about 20.1 trillion. dollars to the cost of stock markets around the world. Governments around the world pumped nearly $ 2 trillion. of dollars in incentives, while central banks cut key interest rates to almost zero, in an effort to support growth.
"In the short term, we need monetary and fiscal stimulus to avoid a reversal and to prevent deflation, but now these easy money started to create bubbles in asset markets, commodities, and credit and emerging markets," - said Rubin. "Under the pretext of maintaining stable growth and prevent deflation, we can re-plant corn for the next cycle of financial instability.
"Markets have grown too much, too soon and too fast" - Roubini said in an interview in Istanbul on October 3. "I see the risk of correction, especially as the markets realize that recovery is not rapid V-shaped recovery, but more like a form of U. Correction can occur in the fourth quarter of this year or first quarter of the forthcoming ".
Shares soared in price around the world in the preceding six months, as the reinforced expectations that the economy out of the deepest recession in 1930. S & P500 index rose by 51 percent from its 12-year low, reached in March, while the European index Dow Jones Stoxx 600 rose by 48 percent. Euphoria contrasts sharply with the cautious tone of representatives of Big Seven. They said that projections for future growth "remains fragile".
"The real economy is only the beginning of recovery, while markets are going your own way" - said Rubin. If the growth keep you waiting, "ultimately markets will go in the artwork and will adjust to more reasonable valuations. I see a growing gap between the way the contemporary situation on the markets and weaker economic activity.
"Lifeless" restoration
The International Monetary Fund predicted that the world economy will grow by 3,1% in 2010, thanks to growth in Asia, after a decrease of 1,1% this year. This is still a "lifeless" and "very weak", said Rubin.
The report that industrial production grew weaker than expectations, and unemployment rose to 26-year high, to put pressure on U.S. stocks, which fell last week. All this fueled concern that economic recovery will be slower than expected.
Cost companies in the S & P500, at 19 times earnings for the last year, according to Bloomberg. This is the highest level since 2004.
Improvements in the U.S. economy is probably much weaker than is reflected in the dynamics of the stock sites, increasing the risk adjustment in assets, said last month the Nobel laureate in economics Michael Spence (Michael Spence). Investors in the markets "overrated" stabilization and growth in the world's largest economy, said Spence.
Creating bubbles
With annual minimum On March 9, the world rally in assets added about 20.1 trillion. dollars to the cost of stock markets around the world. Governments around the world pumped nearly $ 2 trillion. of dollars in incentives, while central banks cut key interest rates to almost zero, in an effort to support growth.
"In the short term, we need monetary and fiscal stimulus to avoid a reversal and to prevent deflation, but now these easy money started to create bubbles in asset markets, commodities, and credit and emerging markets," - said Rubin. "Under the pretext of maintaining stable growth and prevent deflation, we can re-plant corn for the next cycle of financial instability.
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