"Dr. Doom" Rarely Optimistic: U.S. Stocks Won't Crash, Technology Will Allow America to "Defy Fate"

On November 27, renowned economist Nouriel Roubini, who has carried the nickname “Dr. Doom” for nearly two decades, believes that after a brief period of cooling, a strong rebound driven by technology and capital expenditures will follow, allowing the United States to maintain its world-leading position. He pointed out that, first, market discipline, rational advisers, and the independence of the Fed have protected the worst policies after the “Day of Liberation.” As the market then quickly adjusted, Trump had to concede and negotiate a more reasonable trade protocol. The currently popular view—that the U.S. stock market is in a massive bubble destined to burst—is incorrect in the medium term. Roubini noted that accelerating GDP growth could lead to rising real bond yields, but a significant positive supply shock driven by technology could bring inflation close to zero over time, as the production costs of goods and services plummet while productivity growth rises. Therefore, in the long run, the net impact on nominal bond yields may offset each other. He believes that even the U.S. external debt is sustainable because the larger current account deficit caused by a surge in technology-driven capital spending will be offset by capital inflows into dollar assets. At that point, the U.S. will resemble an emerging market economy, where a boom in natural resources or productivity brings an investment surge. (Jin10)