On Wednesday, April 3, RGE Chairman Nouriel Roubini and the RGE Macro Strategy Team discussed tail risk reduction and its impact on global markets. Are the political and market conditions we are experiencing today the calm before the storm? Topics of discussion included:
- US: Self-inflicted sequestration implies a sizable fiscal drag that will keep GDP growth anemic.
- Italian Elections: Does an unstable Parliamentary outcome and a shaky political outlook mean heightened uncertainty for EZ markets?
- Cyprus Bail-In: Another “entirely unique” EZ style solution.
- UK: While the government continues to be focused on austerity measures, the Bank of England is in charge of price and financial stability as well as real GDP growth. Is this an efficient division of labor?
- Japan: Can we expect more yen weakness and continued steam for Japanese equities?
- China: Looser monetary conditions eased pressure on property developers and government, but deleveraging, bank bailouts and an investment stall are still in the cards.
- BRICs: After 2013 bounceback, stalled reforms risk a potential growth slowdown across BRICs.
- EM wide: Do lower rates for longer mean more tolerance for inflation?
- Geopolitics: Politic risks remain, exacerbated by economic weakness and fight for market share.
- Strategy: Equities have already reached our yearend target in the U.S, however, there are risks building, increasing the probability of downside and disorderly scenarios.
To download a PDF of highlights from the latest Global Macro-Market Outlook, click here.