Home / Business / Global "market shock" could trigger next financial crisis, warns Roubini

Global "market shock" could trigger next financial crisis, warns Roubini

The Federal Reserve is expected to win a dovish deal at its meeting this week, paving the way for a July rate cut – the first of its kind in more than a decade – expected by nearly 40 percent economists in a Wall Street Journal poll.

Nouriel Roubini, professor of economics at NYU and perhaps the media favorite, says Nouriel Roubini, who is perhaps the media favorite, says the world "has an even bigger problem."

In our call of the dayRoubini examines "the growing risk of a 2020 recession" and the specter of the crisis in an already fragile global economy.

"A fairly serious shock could trigger a global recession, even if central banks react quickly."

Nouriel Roubini

Last year, he warned of 10 potential risks that could lead to a global recession next year. A more friendly Fed, he says, eliminates one, but the others remain firmly in play and have become more dangerous than before.

"US stock markets have remained soft since our initial comment," he wrote. "There are additional risks associated with the rise of new forms of debt, including in many emerging markets, where most of the borrowings are denominated in foreign currencies. "

According to Roubini, tensions between China and the United States deserve special attention, especially if they lead to retaliation by China by closing its market to US multinationals such as Apple.

AAPL, + 1.02%


Lily: Wilbur Ross lowers expectations of trade deal after G-20 negotiations between Trump and Xi

"In such a scenario, the shock in markets around the world would be enough to trigger a global crisis, regardless of what the big central banks do," Roubini warned. "And given the scale of private and public debt, another financial crisis would likely follow."

Read also: Business conditions are at their worst since the 2008 financial crisis, says Morgan Stanley

At this point, he said, central banks around the world are increasingly constrained, exposing illiquid financial markets to "crash flashes" and other disruptions, such as triggering by Trump from a conflict "wag the dog" with a country like Iran. "This could increase the number of its national polls," he said. "But it could also trigger an oil shock."

Roubini points out that soaring oil prices and trade wars represent more than a mere risk related to supply. They also threaten increased consumption – fares and rising fuel costs result in a loss of disposable income. As a result, uncertainty increases, companies reduce their capital expenditures and investments, and the big slowdown begins.

No sign of shock announces the beginning of the week. Markets around the world look green before Monday's opening bell in the United States.

The steps

The Dow

DJIA, + 0.19%

, S & P

SPX, + 0.25%

and Nasdaq-100

COMP + 0.74%

are all on the rise. After a volatile stretch last week, oil

CLN19, -0.30%

is down, while the gold

GCQ19, -0.25%

is up and the dollar

DXY, -0.18%

is lower.

European shares

SXXP, -0.01%

are mainly mixed, and that was the story for Asian markets

Adow, -0.17%

as well as.

In crypto-currencies, the price of bitcoin

BTCUSD, + 4.55%

BTCUSD, + 4.55%

at broke the $ 9,000 threshold for the first time in more than a year.


Donald Trump warned investors over the weekend that they'd better vote for him, if not. "If someone else takes over in 2020 … there will be a stock market crash like we've never seen before!" He wrote. The assumption is that the gathering we saw is solely due to his work at the White House.

But the Heisenberg Report blog used this revealing table to show how, when Trump became president, the stock market was three-digit compared to the 2009 nadir and that the unemployment rate was already close to its historic low.

The buzz

He did not name himself but Apple

AAPL, + 1.02%

the boss Tim Cook seemed to be targeting the likes of tech giants of Silicon Valley, Facebook

FB + 3.22%


tWTR, + 1.16%

and Alphabet

GOOG, + 0.93%

YouTube during his speech in front of Stanford University graduates on Sunday. "If you have built a chaos factory, you can not escape chaos," he said. "Too many people seem to think that good intentions excuse the harmful results."

Much of South America is recovering from a power outage that left millions of people without power in Argentina, Uruguay and Paraguay on Sunday due to an unexplained failure of the interconnected power grid. this country.

L & # 39; s economy

In conjunction with the upcoming FOMC meeting, which begins Tuesday, data on newly constructed homes were started in May and existing home sales are expected to be released later this week. On Monday, we will see the Fed's manufacturing survey in New York in the Empire State before the opening, followed by the June NAHB builder survey. Regarding the Fed meeting, no policy changes are expected.

The tweet

This is O.J. Simpson … no, really:

Random readings

Tourists must go off the beaten path from time to time.


SBUX, -0.97%

Billionaire Howard Schultz puts the brakes on his victory at the White House in 2020, evoking back pain.

The Chernobyl version of HBO only "scrapes the surface".

This lawn mower ranges from zero to 100 m.p.h. in 6 seconds.

The potential future gay president says that we have probably already had a gay president.

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