'Dr. Doom' Roubini Warns Markets 'Delusional' About Fed Rescue As Trump, Xi Jinping, Jerome Powell Locked In High-Stakes Standoff

Renowned economist Nouriel Roubini, nicknamed “Dr. Doom” for his pessimistic but often accurate predictions, warned Monday that financial markets are mistaken about the Federal Reserve’s willingness to step in amid escalating trade tensions.

What Happened: “Markets have been delusional that Powell put strike price is above Trump’s put strike price. It is NOT!” Roubini wrote on X, referring to the price level at which the Fed would intervene to stabilize markets.

The Turkish-born American economist described a “three-way game of chicken” between President Donald Trump, Federal Reserve Chair Jerome Powell, and Chinese President Xi Jinping, with each waiting for the others to concede first.

The comments come as markets grapple with Trump’s tariff threats against China, including a potential 50% duty if Beijing doesn’t withdraw its recent 34% tariff on American products by Apr. 8. China’s Commerce Ministry has vowed to “fight to the end” against what it called “a mistake on top of a mistake.”

Powell acknowledged Friday that higher tariffs “will be working their way through our economy and are likely to raise inflation in coming quarters,” but emphasized the Fed’s focus remains on its dual mandate of maximum employment and stable prices.

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Craig Shapiro of 3-Circle Investments noted the market has been searching for either a “Trump put” or “Fed put” but “was informed this past week that both puts are struck lower,” suggesting a potential “significant market downturn.”

Roubini criticized Trump’s negotiating approach, writing that “superior chess and poker players like [Russian President Vladimir] Putin and Xi are already out manipulating Trump,” adding that unlike his first term, Trump 2.0 has “mostly a bunch of wimpish sycophantic yes men ‘advisors'” who won’t challenge his “worst destructive policy instincts on trade.”

BlackRock Inc. CEO Larry Fink warned the tariffs would “freeze more and more consumption” in the broader economy, impacting not just Wall Street but Main Street, where “62% of Americans now invest in equities.”

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.