Roubini isn't buying this rally. (Japan is officially in a bull market, as of today.) He dismisses fears of near-term inflation, and says China's mutterings about a global currency is self-serving politcal chatter that will never lead to anything remotely like they're proposing. Of course, China's mutterings provide plenty of fodder for the right-wing, wing-nut survivalists on this board. Well, stock up now guys, cause Roubini says we only have three or four more years of deflationary pressure. (LOL)
‘Deflationary Forces’
“Some banks are going to have to be nationalized,” said Roubini. “It’s going to be bumpy ahead of us.”
Geithner and Federal Reserve Chairman Ben S. Bernanke this week called for new powers to take over and wind down failing financial companies. They said the U.S. also needs stronger regulation to constrain the risks taken by firms that could endanger the financial system.
With “deflationary forces” lingering for as long as three years, Roubini said U.S. government bond yields will remain low and American house prices will fall as much as 20 percent in the next 18 months. While the dollar will initially benefit as investors seek a safe haven in the U.S., the currency will ultimately drop as the nation’s trade deficit shrinks, he said.
Roubini dismissed China’s call for the creation of a new international reserve currency as a “pie in the sky idea” that’s unlikely to gain traction any time soon.
Mobius, Biggs
China’s central bank Governor Zhou Xiaochuan this week urged the International Monetary Fund to expand the use of so- called Special Drawing Rights and move toward a “super- sovereign reserve currency.” Geithner sent the dollar tumbling yesterday by saying he would consider China’s idea, only to drive it back up by affirming that the greenback should remain the world’s reserve currency.
“This was a political call and in a nut shell - it ain’t going to happen any time soon,” Roubini said.
Mobius, who helps oversee about $20 billion of emerging- market assets as executive chairman at San Mateo, California- based Templeton, said March 23 the next “bull-market” rally has begun. Biggs, the former chief global strategist for Morgan Stanley who now runs New York-based hedge fund Traxis Partners, predicted the same day the S&P 500 may jump between 30 percent and 50 percent.
The benchmark index for U.S. equities has surged 11 percent in March, poised for its biggest monthly gain since 1991. The MSCI Emerging Markets Index of equities in 23 developing nations is headed for the steepest monthly advance on record after rising 20 percent in March.
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