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Monday, August 5, 2013

Nouriel Roubini : in the short run, Good News is good for the Equity Markets. And bad news is also good, because it leads to more and longer QE

Were you surprised at the GDP number that came out in late June? I saw you tweet previously that you thought it was actually under 1 percent. 

Nouriel RoubiniNouriel Roubini : At Roubini Global Economics, we have been much more cautious than consensus and policymakers about the U.S. and global recovery. We’re saying year-to-year growth is going to be barely 1.7, 1.8 percent. And next year, where people expect 3 percent growth, we said 2.4 percent. Guess what: Consensus at the beginning of this year was 2.3 percent, 2.4 percent. Now it’s 1.8 percent. So regarding next year—where three months ago consensus was at 3 percent, and we were at 2.4 percent —now consensus is down to 2.7 percent, and I think it’s going to be revised further downwards.
We have been, for many reasons, of the view that while the U.S. is recovering, there will be lots of head winds, starting with the fiscal drag and gridlock in Congress and the variety of weaknesses, particularly the household sector. We have been proven right. But in the short run, good news is good for the equity markets. And bad news is also good, because it leads to more and longer QE. - in indexuniverse

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Nouriel Roubini nicknamed Dr. Doom and lately Dr. Realist by CNBC , is a professor of economics at the Stern School of Business, New York University and chairman of RGE Roubini Global Economics, an economic consultancy firm . Prof. Nouriel Roubini A world-class economist who offers an unflinching look at the global meltdown and distinctive insights into its course going forward. His research on financial crisis in emerging economics has yielded a unique and now vindicated approach to future collapses. Roubini speaks on the global economic outlook and its implications for the financial markets. From his analysis of past collapses of emerging economies, he has identified common factors that support his predictions of crisis in the US and world markets. He has held several high-level advisory positions in the US government and international finance organisations, published numerous policy papers and books on key international macro-economic issues and is regularly cited as an authority in