'Dr Doom' Roubini: Fed won't bail out Trump's trade war

Rouriel Roubini has issued a new wake-up call to Wall Street: traders should reduce their bets that the Federal Reserve will increase interest rate cuts to cushion the impact of the trade war being waged by President Donald Trump. Roubini, the famed economist known as ‘Dr Doom’ for accurately predicting the global financial crisis, this time argued that the U.S. will escape a recession and that the Fed will leave interest rates unchanged for the rest of the year after the dispute over tariff-related policies eases. ‘It's certainly a hard-fought battle between Trump Bottom and Powell Bottom,’ Roubini said, ‘but I'd say Powell Bottom's strike will be lower than Trump Bottom, which means Powell will wait until Trump blinks first.’ Fed Chairman Jerome Powell said last week that the economic impact of the new tariffs could be far greater than expected, and that the central bank had to make sure it didn't trigger a growing inflation problem. Traders this week digested expectations of three to five Fed rate cuts of 25 basis points each, with some on Wall Street even suggesting the central bank could urgently cut rates before its next meeting.