Tags: Roubini | US | stocks | economy

Roubini: Stock Market Rally ‘Can Continue for a While’

Friday, 05 Apr 2013 09:48 AM

By Dan Weil

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New York University economist Nouriel Roubini has an optimistic outlook on the U.S. economy and stock market.

To be sure, he doesn’t think that the economy is going gangbusters, just that it’s going better than other countries’ economies.

“Comparing the U.S. with Europe, with Japan, with the United Kingdom, U.S. economic growth is better,” Roubini tells CNBC.

Editor's Note:
Billionaires Dump Stocks. Prepare for the Unthinkable.

“Deleveragings occur faster, there is a housing recovery, a shale gas and oil revolution, and you have the cost of labor rising in Asia.”

Still, Roubini expects U.S. gross domestic product growth of only 1.7 percent this year, compared with 2.2 percent in 2012.

“We'll have a significant fiscal drag between the sequester and the rise in taxes. There are still the effects of the sequester. There's still the inability to agree on a number of [issues by the political] parties.”

Roubini does expect a pick-up in economic growth next year.

As for stocks, “I've suggested [you] should be overweight in the U.S. equities for the time being,” he states. Slow but improving growth, continued Federal Reserve easing and low risk factors “imply that this rally can continue for a while.”

Sam Stovall, chief equity strategist at S&P Capital IQ, is bullish on U.S. stocks too.

"Whether you look forward, or to the past, in general, it says we are trading at a discount" to historical price-earnings ratios, he tells Yahoo. That discount totals 12 to 15 percent, depending on how you measure it.

Stovall expects the Standard & Poor’s 500 Index to reach 1,670 within a year, a 7 percent increase from Thursday’s close of 1,560. Stovall sees the S&P 500 ending the year at about 1,620 to 1,630.

Editor's Note: Billionaires Dump Stocks. Prepare for the Unthinkable.

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