'Dr. Doom' Nouriel Roubini says the biggest risk to the market right now is an economy that stays too strong

• "Dr. Doom" Nouriel Roubini says the biggest risk to the market right now is an economy that stays too strong.
• He says that there's a possibility economic growth doesn't see a landing at all, and will keep reaccelerating.

Perma-bear Nouriel Roubini is now worried about a US economy that is running too hot.

While there's much talk of a so-called soft landing, he thinks the economy might not land at all, in a "no landing" scenario that sees growth continuing to reaccelerate.

"Markets were pricing in six or eight cuts earlier this year. Now they've converged to what the Fed is telling us, only three cuts," Roubini said in an interview on Bloomberg TV on Monday. "But what if growth is well above potential because of technology and other factors, and the Fed doesn't cut three times — only two, one, some people say zero."

Based on recent precedent, Roubini sees this outcome posing serious downside risk to the market. He points out that last year, when the Federal Reserve made a hawkish revision to interest-rate expectations in August and September, there was a 10% correction in stocks.

"That's a potential paradox, that good news on growth may be bad news for the market if that implies the Fed is not going to cut as much, or as soon as people expect now," he said.

And as Roubini mentioned, rate-cut expectations have gotten more conservative in recent months. The CME FedWatch Tool now shows traders are placing the highest odds of rate cuts worth 100 basis points this year, 50 basis points lower than they expected back in mid-December 2023.