Roubini: What could blow markets out of their complacency

Roubini: What could blow markets out of their complacency. Nouriel Roubini says markets have, so far, reacted benignly to today's geopolitical risks. However, several things could change that. 1) A terror attack, particularly one in Europe or the US, could surprise markets. 2) Markets could be incorrect in their assessment that conflicts like that between Russia and Ukraine, or Syria's civil war, will not escalate or spread. 3) Geopolitical and political tensions are more likely to trigger global contagion when a systemic factor shaping the global economy comes into play. (For example) The situation in Hong Kong, together with the news of further weakening in the Chinese economy, could trigger global financial havoc. Or the US Federal Reserve could spark financial contagion by exiting zero rates sooner and faster than markets expect. Or the euro zone could relapse into recession and crisis, reviving the risk of redenomination in the event that the monetary union breaks up. The interaction of any of these global factors with a variety of regional and local sources of geopolitical tension could be dangerously combustible.


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