Nouriel Roubini : ...This massive wave of liquidity searching for yield fueled temporary asset-price reflation around the world. But there were two risks to liquidity-driven asset reflation. First, if growth did not recover and surprise on the upside (in which case high asset prices would be justified), eventually slow growth would dominate the levitational effects of liquidity and force asset prices lower, in line with This brings us to the recent financial market turbulence. It was already evident in the first and second quarters of this year that growth in China and other emerging markets was slowing. This explains the underperformance of commodities and emerging-market equities even before the recent turmoil. But the Fed's recent signals of an early exit from QE – together with stronger evidence of China's slowdown and Chinese, Japanese, and European central bankers' failure to provide the additional monetary easing that investors expected – dealt emerging markets an additional blow.....- in the guardian
weaker economic fundamentals. Second, it was possible that some central banks – namely the Fed – could pull the plug (or hose) by exiting from QE and zero policy rates.
