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Peter Davis

An writer at FOMOdrive

  • Sep 05, 2023
  • 2 min read

Nouriel Roubini warned about the collapse of the stock market

In 2023, Nouriel Roubini acknowledged that there could be a decline in the stock market during the latter half of the year.

Investors were warned by JPMorgan Chase to not be overconfident.

The US stock market is being supported by instability in Europe and China.

Economist Nouriel Roubini has warned that the global stock market could fall by 10% in the second half of 2023 if the economy presents any unexpected surprises, according to RBC.

He stated that if the global economy begins to deteriorate and inflation remains high in Europe, the United States, and the United Kingdom, a 10% correction is not out of the question.

Roubini has yet to determine if the global economy will experience a soft or hard landing. Despite the reduced risk of a hard landing, there is still a chance of a correction in the stock market.

Roubini earned the nickname "Dr. Doom" (Doctor Apocalypse) for his accurate prediction of the US housing bubble collapse in 2007-2008, which marked the start of the global financial crisis.

JPMorgan has issued a warning that investors in the market have become too confident, which is a cause for concern.

The bank notes that there is a clear overconfidence in sentiment, the VIX volatility index is close to its all-time low, and the amount of positions has risen.

Investors are motivated by the fear of not being included (FOMO). Nevertheless, "there is no longer a buffer as investor sentiment now completely reflects the anticipation of a gentle descent."

The MSCI USA Index appears to be overvalued at its current price, as the stock has a forward price-to-earnings (P/E) ratio of 19x.

Bloomberg reports that the US stock market is being supported by stagflation in Europe and a real estate downturn in China. The S&P 500 is currently 8% higher than the Stoxx Europe 600.

For 25 consecutive weeks, Bank of America has reported that investors have withdrawn their money from European equity funds. Additionally, the German DAX, which is comprised of the region's largest manufacturing companies, experienced its most severe month-over-month decline since December in August.

Oppenheimer Asset Management has recently increased their forecast for the S&P 500, predicting that it will close the year at 4,900, which is a 9% increase from its current level.

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