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TisM: 'Dr Doom' predicts share falls in late 2010

Andrew Oxlade, This is Money.uk
22 January 2010, 9:35pm

'Dr Doom' economist Nouriel Roubini, one of the few to predict the financial crisis, has renewed his warnings about the stock market rally.

He says the bull market may end in the second half of the year as the recovery in the world economy runs out of steam.
He also expects deflationary pressures to limit gains in profits for companies. That warning comes despite a sharp rise in inflation in recent months. UK CPI inflation went from a low of 1.1% in September to 2.9% in December, up from 1.9% in November.

Roubini (pictured above), a New York University professor who predicted the financial crisis in 2006, told Bloomberg in Hong Kong that he feared 'unraveling and a significant correction of asset prices which will be damaging to global and regional economic growth.'

World shares have risen nearly 75% since the market low in March. Rises in several emerging market countries, such as Brazil, exceed 100%.

'The real economy is gradually recovering but since March, asset prices have gone through the roof,' Roubini said. 'If I'm correct, by the second half of the year, there's going to be a slowdown of growth in US, Europe and Japan. That could be the beginning of a market correction because the macroeconomic news is going to surprise on the downside.'


Any decline in commodities may be limited because of demand for raw materials from emerging markets, he said.

Roubini warned investors several times last year not to get tempted into a sucker's rally.

Roubini's recent calls

Professor Nouriel Roubini, a US economist feted for forecasting the credit crunch as early as 2006, remained extremely gloomy about economic prospects in May 2009, expecting American unemployment to rise to 11%.
- Roubini warns on 'sucker's rally'

...and in August he stepped up warnings of a double-dip. In October 2009, he warned the property market may yet undermine the recovery and warned again on the stock market rally.

http://www.thisismoney.co.uk/news/article.html?in_article_id=497992