Fitch: No Asset Bubbles Yet
Thursday, November 12, 2009 10:14 AM
Fitch Ratings executive David Riley says investors worried about a bubble in global financial markets are jumping the gun.
A bevy of excess capacity will keep inflation down, limiting the possibility of a bubble, the heads of Fitch's global sovereign ratings told Bloomberg.
"Some concerns about the asset-price inflation are overstated," he said.
"Policy makers want to reflate asset prices as part of the recovery. If that starts getting out of hand, then you can get worries about future asset bubbles. These concerns I think are somewhat premature."
Some, such as NYU economist Nouriel Roubini, say the dollar carry trade has helped fuel bubbles in everything from U.S. stocks to commodities to Asian real estate.
Yet some agree with Riley that bubbles aren't yet brewing.
Investment legend Jim Rogers is one. He points out that sugar and silver are about 70 percent below their record highs and that coffee, cotton and the Shanghai stock exchange are down about 50 percent from their all-time peaks.
Those certainly aren't signs of a bubble, he told Bloomberg.
Laurence Fink, CEO of money management monolith BlackRock, also doesn't see bubbles blowing.
"Bubbles don't happen when people are talking about them," he told The Wall Street Journal.
"Bubbles are occurring when people aren't aware of it. . . There are just too many articles about this liquidity bubble again."
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