Roubini: Dow 7,000 Likely 'Sometime Next Year

[Chimichurri]

He's been right about this so far even when he was being laughed at for predicting what's happening.

Today's global rate cuts have reduced the risk of a market crash, but won't resolve the underlying crisis, says NYU economist Nouriel Roubini of RGE Monitor.

But the financial market crisis has unfolded even quicker than Roubini expected (which is saying something), and the economist now thinks the Dow and S&P will suffer 50% declines from last October's peak vs. 40% previously.

In other words, the Dow is going to 7,000, but over the course of months vs. days if Roubini is right, as -- unfortunately for bulls -- he mostly has been for the past two years.

"The policy response is going to become more aggressive a steady flow of bad financial and macro economic news is going to push down equity markets," he says, forecasting a real bottom won't be hit until "sometime next year."

Because of growing slack in the global economy, Roubini says deflation is going to become a much bigger threat in the next six months vs. inflation. In such an environment, cash, Treasuries and gold are the only safe bets he says -- provided your holdings are within the FDIC's new $250,000 insurance cap.

http://finance.yahoo.com/tech-ticker/article/91357/Roubini-Rate-Cuts-Reduce-Crash-Risk-But-Dow-7000-Likely-%27Sometime-Next-Year%27?tickers=^DJI,^GSPC,^IXIC,SPX,DIA

[Not the Only One]

1. The moment Obama wins on 11/4, he needs to get in front of this

He needs to be honest and frank and blunt and show that he understands the problems and he has a plan and that things will be tough, but we'll make it through okay ultimately.

[nadinbrzezinski]

2. and send his team to treasury like FDR did in '32

[Warpy]

3. He must have been reading my posts in the Economy forum

because that's what I predicted at the beginning of the year before we get rid of Stupid and his team of GOPonomic bunglers.

I fully expect it to go lower, for equities to become undervalued for a time. In fact, I'm counting on it. That's the time to go shopping, folks.

[theoldman]

6. I do not agree with a DOW down to 7000.

It would not surprise me at all if it starts to go up after the November election. I guess we will just have to wait and see.

[TexasObserver]

4. That's why it needs to happen THIS year, NOW.

There is little doubt the government is helping to artificially keep the market indicators higher than they should be. The Plunge Protection team is designed to prevent a one day collapse, and it is doing that job.

I don't know if the DOW dips below 8000, but it's certainly headed below 9K.

I am confident that the economy will recover by 2011, but it could still be struggling in 2010.

[anigbrowl]

5. That sounds about right. I was guessing 7500, but yes.

However, I think that'll come by December - for one thing, thanksgiving sales are not going to mean big profits for retailers this year. As for Christmas, forget it.

[Selatius]

7. All I know is Obama better be the next FDR or this shit is going to get worse.

You can restore an economy by boosting the demand-side of the equation. Without demand, producers won't produce anything.