Investors might get burned this year if they move into stocks, a typically downbeat note from Dr Nouriel Roubini suggests.
Recent rallies on stock markets were illusory, with the world still facing a long and severe recession.
This is the opinion of Dr Nouriel Roubini, who is celebrated for having predicted the current global credit crunch, financial crisis and economic downturn years prior to the events coming to pass. Popularly known as "Dr Doom", the New York-based economist said that the gains on stock markets marked around the world from November to early January were based on the - in his view erroneous - belief that recovery would begin later this year.
Bourses have been falling for the past week, retreating especially sharply yesterday on the release of a raft of worse-than-expected economic data including US retail figures for the end of 2008. London's FTSE 100, for example, lost 4.97 percent of its value across the day.
Dr Roubini predicted in his new note that a continual stream of negative 'macro-economic' - in other words, dealing with large-scale or general economic concerns - news would push markets down to "new lows". This implies that the FTSE will drop down from its current level of 4150 past its 2008 low of 3780.96.
"The drumbeat of terrible - and worse than expected - macro news and earnings news and financial news has finally taken a toll on the delusional market belief that the worst was over for financial markets… equity prices have already reversed more than half of their most recent bear market rally as the lousy macro news [has] finally shocked in the last week the wishful thinkers," Dr Roubini said.
"So 2009 will be a painful year of global recession and further financial stresses, losses and bankruptcies."
