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Roubini bearish on gold, but optimistic about U.S. and Japanese stocks
By marketwatch.com
Prominent economist Nouriel Roubini, who is known as “Dr. Doom,” on Monday offered a negative take on gold and certain emerging markets, along with kind words for U.S. and Japanese stocks and the dollar.
BloombergA file photo of Nouriel Roubini
“Why are we bearish on gold? Several reasons,” he said while delivering the keynote address at IndexUniverse’s Inside Commodities Conference in New York.Roubini said tail risks for the global economy have declined and that’s hurt demand for the metal often seen as a safe haven. In addition, gold will be pressured by a strengthening dollar and real interests rates going higher, said the economist, who is known for his generally gloomy views.
In response to a question on areas where he’s more optimistic, Roubini suggested overweighting equities vs. bonds, and within equities, focusing on advanced economies rather than emerging markets — in particular U.S. and Japanese equities rather than European or U.K. stocks.
Roubini was gloomy on commodities in general, saying the “commodity supercycle” is likely over.
“Most commodity prices over the next couple of years are going to be lower rather than higher,” he said. Roubini cited Chinese growth slowing and becoming less resource-intensive, plus the Federal Reserve starting to wind down its stimulus measures. As he did with gold in particular, he also cited higher interest rates and a strengthening dollar, adding that “dollar doomsday folks” are wrong. The U.S. has advantages over other developed nations with its demographics and technology, he said.
Another area to be gloomy? Certain emerging markets with current account deficits and other challenges. Roubini said he’s concerned about nations such as Indonesia, India, Brazil, Turkey and the Ukraine.
“We remain cautious about these emerging markets that are very fragile in many ways,” he said, calling a recovery in the last few sessions just a “temporary rally.”
Some listeners seemed to have expected more gloom and doom overall from the well-known economist. “That was surprisingly upbeat,” said Dave Nadig, president of ETF Analytics at IndexUniverse, in comments to the audience after Roubini’s speech.
–Victor Reklaitis
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