The Uptick Rules

From Project Synidates:Nouriel Roubini The Uptick’s Downside: 

Since late last year, a series of positive developments has boosted investor confidence and led to a sharp rally in risky assets, starting with global equities and commodities. Macroeconomic data from the United States improved; blue-chip companies in advanced economies remained highly profitable; China and emerging markets slowed only moderately; and the risk of a disorderly default and/or exit by some members of the eurozone declined.

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But at least four downside risks are likely to materialize this year, undermining global growth and eventually negatively affecting investor confidence and market valuations of risky assets.First, the eurozone is in deep recession, especially in the periphery, but now also in the core economies, …

 Second, there is now evidence of weakening performance in China and the rest of Asia. In China, the economic slowdown underway is unmistakable. Export growth is down sharply, turning negative vis-à-vis the eurozone’s periphery. Import growth, a sign of future exports, has also fallen. …

 Third, while US data have been surprisingly encouraging, America’s growth momentum appears to be peaking. Fiscal tightening will escalate in 2012 and 2013, contributing to a slowdown, as will the expiration of tax benefits that boosted capital spending in 2011. Moreover, given continuing malaise in credit and housing markets, private consumption will remain subdued; ….

 Finally, geopolitical risks in the Middle East are rising, owing to the possibility of an Israeli military response to Iran’s nuclear ambitions. While the risk of armed conflict remains low, the current war of words is escalating, as is the covert war in which Israel and the US are engaged with Iran; …

 In addition, he says, middle east is dangerously heated, the Arab spring on the frying pan could go any or every direction.

I think probably the Arab spring and the eurozone periphery will be play major role for economy recovery. So far even though euro melt down, other side of continents growthe have been stable and relative. So world leaders must act together, pushing the fiscal austerity,  restoring  competitiveness the eurozone periphery and  channeling encouraging  positively the boiling  Arab Spring energy is key to the recovery.