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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