Trump rally 'running out of steam' says economist Roubini

The man who predicted the global financial crisis of 2008 has forecast that the record-breaking rally experienced by US markets in the wake of Donald Trump's victory in the country's elections is about to come to an end.

Nouriel Roubini, a business professor and chairman of Roubini Macro Associates, wrote an opinion article for Project Syndicate. In the article, he predicts that investors will soon realise that Trump's policies are negative for the economy on the whole.

"It is little wonder that corporations and investors have been happy," wrote Roubini, who is commonly known as "Doctor Doom" after predicting the housing bubble which led to the 2008 crisis.

"This traditional Republican embrace of trickle-down supply-side economics will mostly favor corporations and wealthy individuals, while doing almost nothing to create jobs or raise blue-collar workers' incomes."

The Dow Jones Industrial Average broke the magic 20,000 barrier in January for the first time in its history, and the S&P 500 and Nasdaq indices have also hit record highs since Trump won the race for the White House.

"The corporate sector's animal spirits may soon give way to primal fear: the market rally is already running out of steam, and Trump's honeymoon with investors might be coming to an end," Roubini added.

Trump's threats to introduce a 45% tariff on imports from China, as well as other protectionist trade policies, could mark the beginning of a trade conflict which would ultimately stunt growth, according to the economist.

"America's trading partners will have little choice but to respond to US import restrictions by imposing their own tariffs on US exports," Roubini said.

"The ensuing tit-for-tat will hinder global economic growth, and damage economies and markets everywhere."