Roubini: A Dollar Rally, Not Crash, Could Slam Markets

Since asset prices are being inflated by a weak dollar right now, a dollar reversal could smash this rally, says Nouriel Roubini. While this may not be in the cards in the short term, it will be a substantial risk once the fed is pushed to increase interest rates.

Starting at 3:15:

“In the short run, what’s happening is that there is a wall of liquidity, not just in the United States but around the world, that is chasing assets. It is equities, commodities, it’s credit, it is gold, it is emerging market asset classes”

“Everybody is borrowing, shorting the dollar, and investing in assets all over the world.”

“Once the dollar reverses, you need to close your shorts, dump assets…”

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