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Tags: Nouriel Roubini | economy | bull | Dr Doom

Meet the Sunny Side of Nouriel Roubini: Call Him 'Dr. Boom'

By    |   Thursday, 15 May 2014 02:44 PM EDT

Nouriel Roubini, the bearish economist long dubbed "Dr. Doom," may be changing his tune. He even sees some patches of blue sky now in the U.S. and European financial markets.

On a panel at the annual SALT hedge fund conference this week, Roubini said major global economic risks have dissipated. That's a real switch for the New York University professor, who notably predicted the 2008 housing meltdown and financial bust, according to Fortune.

"The threat of a fiscal crisis in the United States is done," Roubini declared before the crowd of hedge fund executives. "The Fed's unconventional monetary policy has worked."

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Roubini also said the European Union looks like it's on sounder footing these days, and even offered his opinion that "Abenomics" appears to be working in long-stagnant Japan.

Roubini predicted stocks are headed upward for the next few years, thanks to the Federal Reserve's maintenance of low interest rates. "We're not in a bubble yet," Roubini declared.

Sitting next to Peter Schiff, the prominent gold bug and usually bearish asset manager, Roubini joked, "Next to him, you should call me Dr. Boom."

Schiff, CEO of Euro Pacific Capital, and Roubini, later took opposite sides of the inflation versus deflation debate at the SALT conference and in a follow-up appearance on CNBC.

Roubini is not entirely bullish, however. In an interview with ETF.com last week, he acknowledged all of his optimistic points at the SALT conference, but also said some fresh economic concerns could be brewing on the horizon.

Foremost among them is the state of China's economy and the state of its banking system, which some analysts say is overheated.

"I worry that the landing is not going to be very soft in China and it is going to be very bumpy and there will be a sharp slowdown, which is more than people are expecting," he predicted.

His second concern is over the timing of the Fed's eventual exit from its massive monetary stimulus program.

"If you make the mistake of doing it too soon, then you have a hard landing of the economy. If it's too late you take the risk of an asset price bubble," he said.

Next on his worry list are concerns about emerging markets and their fragile recovery, followed by the Ukraine crisis and territorial disputes in Asia.

His prescription for investors to ease those risks is fairly benign, and includes taking on some level of short positions against the stock market.

"If you're an investor in this low-volatility environment, then buying insurance against tail events such as a 10 to 20 percent correction in U.S. and global equities is reasonably cheap. So, you would buy insurance if you're concerned about this risk materializing and you can then get the reassurance," he told ETF.com.

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StreetTalk
Nouriel Roubini, the bearish economist long dubbed "Dr. Doom," may be changing his tune. He even sees some patches of blue sky now in the U.S. and European financial markets.
Nouriel Roubini, economy, bull, Dr Doom
484
2014-44-15
Thursday, 15 May 2014 02:44 PM
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