Roach Pushes Out Timing of Apocalypse

Morgan Stanley’s Stephan Roach has been preaching doom and gloom for the US economy for a few years now. He has consistently maintained that the US consumer would eventually buckle from its high rate of consumption of Chinese goods once interest rates start heading up. Although Roach still believes this will happen, it may take longer than expected, and in the meantime, the American consumer may get one last final chance to spend the last of the equity in the houses they own before all hell breaks loose.

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“Consequently, I now believe that the Chinese economic growth dynamic is about to come under far more immediate pressure than the American consumer. This is a very important shift in the sequencing of global rebalancing. That’s because the rising probability of an imminent China slowdown is likely to have important and constructive interest-rate implications that could keep the American consumer in the game for longer than I had previously thought.”