Nouriel Roubini Predicts a 20% Decline For Global Equities in 2009
If you don't know who Nouriel Roubini is - you should.
Roubini made a name for himself by correctly predicting the housing bust and deep recession that we currently find ourselves in.
Nouriel Roubini is a professor of economics at the Stern School of Business at New York University. He has been given the nickname "Dr. Doom" due to his incredibly pessimistic views on the future of the global economy.
That being said - his pessimistic views have largely come true, leading some to call him a "prophet" and "sage". His views are respected and he has appeared before Congress and the World Economic Forum.
To give you an idea of how accurate his predictions were, I give you one of his quotes taken from September 2006. This quote was taken from his speech to the International Monetary Fund:
"In the coming years, the United States will likely face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession."
He said that he saw "homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt."
WOW. If that doesn't sum up the past few years, then I don't know what does.
Roubini has become an adviser to a number of central bank governors and finance ministers.
In a nutshell - Roubini has been wildly accurate with his predictions, so we certainly need to listen to what he has to say about the situation going forward.
Roubini now says that global equities will fall "20 percent" from current levels due to a slowdown in China's economy.
He says that despite recent data to the contrary, China is in a recession and this will have dire consequences for economies and markets throughout the world.
So where would that leave the S&P 500, Nasdaq and DJIA if Roubini's prediction comes true?
DJIA is currently at 8,122.50
Nasdaq is currently at 1,465.49
S&P 500 is currently at 827.50
If all three averages receive a 20% haircut over the next year, then:
DJIA would be at 6,498
Nasdaq would be at 1,172.39
S&P 500 would be at 662
What do you think? Will Roubini continue to be right?
Or will the markets put in a bottom this year and start to recover?
Filed under: The Economic Meltdown