I'd love to hear some thoughts about this. I'd be lying if I said I wasn't anxious over this bull market running off a cliff.


Yale fellow, former Morgan Stanley chief economist: A correction looms




By Shawn Langlois
Published: Sept 28, 2017 12:50 p.m. ET


The combo of lofty valuations and rising interest rates is about to wreak havoc on markets, potentially before the end of the year, according to Stephen Roach, former Morgan Stanley chief economist and Morgan Stanley Asia chairman.
In fact, he told CNBC that “we are long overdue for a correction” and that there’s a 50/50 chance we’ll see a double-digit decline in the coming months.

“Inflation has all but vanished from the scene,” said Roach, currently a fellow at Yale University. “Policy makers as well as investment managers, to say nothing of the investors that they represent, don’t remember what inflation is like and what monetary tightening might be in that environment.”

He praised the Fed a few days ago in a note, but said its “commitment to normalization of its policy rate and balance sheet” should have come much earlier.

“The markets are frothy, and it’s a froth again that strikes me as reminiscent of what we saw in a lengthy precrisis period in the 2003 to early 2007 period,” Roach explained to CNBC on Wednesday. “I think the one lesson we learned from that crisis is that financial stability addressing frothy markets with a more normal, tougher, disciplined monetary policy is not such a bad thing.”