Keith Robison's  Instablog

Each year Index Universe holds it’s annual Inside Commodities Conference at the New York Stock Exchange.  The last two conferences have featured speakers such as Jim Rogers, Noriel Roubini, Peter Schiff, and John Brynjolfsson.  Unlike last year’s conference where most panelists and speakers agreed that commodities would soon shoot to the moon this year’s conference was full of diverging opinions on everything from $2000 gold to inflation. 

The key speaker of this year’s conference was Noriel Roubini.  The NYU economist was recently voted the fourth best financial mind in the world by Bloomberg terminal users.  He stated that he expects the recovery to be “U” shaped although the markets are pricing in a “V” shaped recovery.  As a result asset prices have increased “too much, too far, too soon”. He said that there is a 25% probability of a “W” or a double dip in the economy and he stated if a “W” were to occur the markets would break through previous lows set back in March. 

Speaking on commodities, Roubini said that the move from $30 oil to $80 oil has not been justified by supply and demand.  He believes oil could go as high as $100 a barrel as a result of the dollar carry trade and that it would cause severe damage to global growth, but he said that hyperinflation is not a scenario that could play out due to the weakened state of the United States economy.  The dollar carry trade, which Roubini said is starting to create bubbles in risky assets, could quickly pop sending investors fleeing for the exits.  He told the audience that a short dollar trade reversal would be rapid and would cause a massive downturn in risky assets.