While maintaining an optimistic outlook on the overall investment landscape for AI, renowned economist Nouriel Roubini, widely known as "Dr. Doom," has identified four major macroeconomic risks, cautioning investors against complacency.

In a Bloomberg interview this week, Roubini stated that the AI-driven investment surge is far from over. The substantial capital expenditure by tech heavyweights on AI infrastructure and the anticipated productivity returns serve as the core basis for his bullish stance. He explicitly stated that the current AI trend does not constitute a market bubble, asserting, "We are in the midst of a real global investment boom."

However, the economist, who gained fame for accurately predicting the 2008 financial crisis, also highlighted four specific risks: the ongoing blockade of the Strait of Hormuz, the potential escalation of the Iran war following the midterm elections, upward pressure on global bond yields, and the potential risk of periodic market corrections. These combined risks represent hidden dangers in the current macroeconomic environment that cannot be ignored.

Strait of Hormuz Blockade Keeps Oil Prices Elevated

The disruption of Persian Gulf oil flow has persistently troubled markets since the outbreak of the Iran war, at one point pushing international oil prices into triple digits.

Roubini listed the situation in the Strait of Hormuz as the primary risk. Although oil prices have retreated from wartime peaks, they remain elevated, with the risk of further price increases persisting as the conflict continues and oil reserves are steadily depleted. The international benchmark Brent crude rose 6% this week following a new round of strikes between the US and Iran. Meanwhile, according to the latest data from the US Energy Information Administration, US strategic petroleum reserves fell to their lowest level in 43 years last month.

In risk assets, equity markets have generally come under pressure alongside rising oil prices, reflecting investor concerns over resurgent inflation and damage to economic growth.

Escalation Risk for Iran War Post-Midterms

Roubini pointed out that there is a significant risk of escalation in the Iran war after this year's midterm elections. He believes that Trump, potentially considering his personal political legacy, might increase military pressure on Iran should the election results be unfavorable.

"If they (the Republicans) lose control of the House, he might start bombing Iran, trying to win this war—that's always a risk," Roubini said.

If this scenario materializes, it would further impact energy markets and global risk appetite.

Absence of Fiscal Consolidation Poses Upside Risks for Bond Yields

Roubini expressed concern regarding the direction of global bond markets, with the core reasoning being the continued expansion of fiscal deficits in various countries without the necessary "fiscal consolidation" being implemented.

"If this situation doesn't change, bond yields could move higher, which would squeeze domestic demand," he stated.

The US bond market has recently been disturbed by multiple factors: the budget deficit is perceived to be on an unsustainable trajectory, long-term inflation expectations are rising, and investors' willingness to hold government bonds has decreased—all contributing to upward pressure on yields. Rising yields not only reflect a repricing of the interest rate path but also imply that higher financing costs will transmit pressure to the real economy.

AI Bull Market Not Over, But Correction Risks Cannot Be Ignored

Despite his optimistic view on the overall investment environment, Roubini still flagged the possibility of market corrections. "Some corrections could happen," he said, but emphasized, "The downside risks are so old-fashioned. We are in the middle of a real global investment boom."

He explicitly denied that the current AI trend is a bubble, believing that tech giants' continuous increase in AI infrastructure investment, along with the anticipated productivity gains, provide solid support for the market.

However, more market forecasters have recently begun warning of correction risks, especially against the backdrop of persistently high yields and the market entering a seasonally weak window. According to analysis from Bank of America, looking back to 1928, the S&P 500's average three-month performance between August and October is the worst of the year, with an average decline of 7.35% during down years.