'Dr Doom' Nouriel Roubini Suggests 'Good News On Growth May Be Bad News For The Market' Amid No Landing Fears

In a recent interview with Bloomberg TV, economist Nouriel Roubini expressed concerns about the possibility of the U.S. economy not experiencing a soft landing, which could lead to a “no landing” scenario. This could result in continued reacceleration of growth, potentially causing significant downside risks for the market.

What Happened: Roubini, also known as “Dr. Doom,” is worried that the U.S. economy might not land at all, leading to continued growth, as reported by Business Insider on Monday. He pointed out that the market has adjusted its expectations for interest rate cuts to align with the Federal Reserve’s guidance. However, if growth remains well above potential due to technological advancements and other factors, the Fed may not cut rates as much as expected or even not at all.

“That’s a potential paradox, that good news on growth may be bad news for the market if that implies the Fed is not going to cut as much, or as soon as people expect now,” he said.

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Roubini highlighted the recent shift in rate-cut expectations. Traders are now predicting the highest likelihood of rate cuts worth 100 basis points this year, which is 50 basis points lower than their expectations in mid-December 2023, according to the CME FedWatch Tool.

Why It Matters: The concerns raised by Roubini align with a broader discussion about the trajectory of the U.S. economy. Last week, economist Mohamed El Erian questioned the U.S. economy’s ability to continue driving global growth, citing several critical factors that could impact its momentum.

Similarly, Goldman Sachs CEO David Solomon cautioned against overconfidence in the Fed’s ability to engineer a soft landing for the U.S. economy amid ongoing inflationary pressures and geopolitical risks.

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