LIVE MARKETS-US bulls say economy will boom no matter what

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US BULLS SAY ECONOMY WILL BOOM NO MATTER WHAT

Trump's tariff announcement last month caused widespread recession alarm, with hedge funds rushing out of the market as indices sold off and volatility gauges echoed moves last seen at the height of the COVID shock in 2020.

Despite the prevailing doom-and-gloom narrative accompanying these wild swings - which also saw Wall Street banks scrambling to cut their growth forecasts to bake in higher tariffs - others were keeping cool about the prospects for the U.S. economy.

Back during the early April selloff, Nouriel Roubini, CEO of Roubini Macro Associates and professor emeritus at New York University, outlined a bullish outlook for the U.S., saying technological advancements would offset new trade barriers.

"With the momentum that innovation brings, it won't even matter if Mickey Mouse is president - the economy will keep growing," Roubini was quoted as saying. "By the end of this decade, U.S. growth could hit 4%."

Siding with Roubini's "Mickey Mouse argument", Pareto Asset Management Chief Economist and Strategist Finn Øystein Bergh also believes there is no reason to lose sleep over trade war concerns, pointing to the underlying strength of the private sector.

"There is of course a real chance of both recession and stagflation... Given the strength of the business sector, however, and perhaps a modicum of common sense in the Trump administration, I believe it is not likely to be severe".

He says the big unresolved issue in the U.S. economy is the government deficit, which has grown from 65% of GDP in 2007 to over 120% today, while the private sector is in much better shape, having deleveraged heavily since the financial crisis.

"I put my trust in firms with sound balance sheets, capable leadership, and resilient business models," writes Bergh in his latest monthly note.

(Danilo Masoni)

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