Throughout 2022, Wall Street has repeatedly warned investors that a recession could be on its way.
From JPMorgan Chase CEO Jamie Dimon to former Federal Reserve officials, the world’s top economic minds have pointed, practically in unison, to the storm of headwinds facing the global economy and expressed fears about the potential for a serious downturn.
In the U.S., consumers are grappling with near 40-year-high inflation and rising interest rates, all while the world struggles to cope with the war in Ukraine, the European energy crisis, China’s COVID-zero policies, and more.
And even after a more than 21% drop in the S&P 500 this year, Wall Street’s best minds still think stocks have further to fall.
Icahn made his name as a corporate raider on Wall Street in the 1980s, buying up unloved companies and aggressively advocating for change to improve shareholder value by appointing board members, selling assets, or firing employees.
Even at 86, Icahn remains one of Wall Street’s most respected minds, and this year he has repeatedly warned the U.S. economy and stock market are in trouble.
The investor argues the Federal Reserve boosted asset prices to unsustainable levels amid the pandemic using near-zero interest rates and quantitative easing–a policy where central banks buy mortgage backed securities and government bonds in hopes of spurring lending and investment.
“We printed up too much money, and just thought the party would never end,” he said, adding that with the Fed switching stances and raising rates to fight inflation, he now believes “the party’s over.”
The hangover from the Fed’s loose monetary policies, according to Icahn, is sky-high inflation, which rose 8.3% from a year ago in August.
“Inflation is a terrible thing. You can’t cure it,” Icahn said, noting that rising inflation was one of the key factors that brought down the Roman Empire.
Rome famously experienced hyperinflation after a series of emperors lowered the silver content of their currency, the denarius. The situation then dramatically deteriorated after Emperor Diocletian instituted price controls and a new coin called the argenteus, which was equal in value to 50 denarii.
The result of Roman emperors’ unsustainable policies was an inflation rate of 15,000% between A.D. 200 and 300, according to estimates by some historians.
Icahn said that inflation like this worries him so much that he would have liked to see the Federal Reserve raise interest rates by a full 1% on Wednesday, instead of the 75-basis-point hike that Chair Powell announced, to ensure price increases won’t stick around.
But despite Icahn’s inflation fears, the billionaire investor said he has managed to outperform his peers by hedging his portfolio–a strategy that uses derivatives to limit market risk and increase profits–during the market downturn.
Icahn Enterprises’ net asset value jumped 30% or $1.5 billion in the first six months of 2022.
On Wednesday, Icahn argued that there are still stocks that look appealing on the market today, but he cautioned investors not to get greedy too soon.
“I think a lot of things are cheap, and they’re going to get cheaper,” Icahn said, arguing that companies in the oil-refining and fertilizer businesses should outperform the overall market moving forward.
Wednesday’s warning for investors wasn’t the first from Ichan this year.
The billionaire warned back in September that a recession or “even worse” was likely on the way for the U.S. economy and compared today’s high inflation with that of the 1970s, arguing the Fed will struggle to control rising consumer prices.
“You can’t get that genie back in the bottle too easily,” he said.
This story was originally featured on Fortune.com
There’s no shortage of places to get a perfectly acceptable sandwich. You can always head to your neighborhood convenience store for a chicken salad sandwich, pull together a simple recipe of your own at home, or rely on one of the many chain sub restaurants across the country. If you tend to do the latter, forget the Subways, Jimmy John’s, and even the Quiznos of the world, because a new chain is about to become top dog in the sub sandwich wars, and deservedly so. It’s time for Jersey Mike’s to
One man’s plea deal may shed light on Brett Favre’s possible ties to a $70 million Mississippi welfare scam
We may soon find out more about NFL Hall of Famer Brett Favre’s potential involvement in a massive welfare scandal in his home state of Mississippi.
Nothing says “party pooper” quite like a lack of decorations. They’re a key aspect of any proper get-together, whether you like to hang balloons and streamers or go all-out with a theme for your birthday. But stocking up at one particular party supply chain will no longer be possible, as the company just confirmed it’s going out of business. Read on to find out which chain will soon be closing all of its stores.READ THIS NEXT: This Popular Retail Chain Is Closing Stores, Starting Oct. 5. Store c
Abigail Disney wants Disney diehards to ‘pay attention’ to how theme park workers are paid: ‘Cinderella is sleeping in her car!’
In a candid interview, Walt Disney’s grandniece addresses the company’s economic inequalities, and why the founder would embrace the studio’s push for diversity.
On Wednesday, the Fed bumped up interest rates again, its third 75-basis point hike since June, and signaled that there could be two more such hikes by the end of this year. The conventional wisdom has the Fed acting properly, and aggressively, in an attempt to counter inflation raging at 40-year high levels. But conventional wisdom isn’t always right – and we can learn a lot by consulting the contrarians. Few top investors are more contrarian than Cathie Wood. The founder and manager of ARK Inv
In this article, we will look at the 4 stocks billionaire Leon Cooperman is talking about right now. If you want to skip reading about Leon Cooperman, his investment career, and his stock-picking strategy, you can go directly to Billionaire Leon Cooperman is Talking About These 2 Stocks. Leon Cooperman’s Investment Career Leon Cooperman is […]
In a year when all three of the major stock indexes in the United States have declined by 15% or more, there are plenty of dividend stocks out there with high dividend yields. What if I told you that there is a Dow Jones Industrial Average stock with a yield north of 6%? Dow Inc. (NYSE: DOW), a maker of various chemical products and one of the Dow Jones Industrial Average’s 30 components, fits this description.
A year from now, metrics like fed-fund rates and mortgage rates should be approaching their long-term average. What do we until then? Some strategists suggest bizarre investments like long-term Treasuries, shorting gold, and buy stocks in companies with decent dividends and share-buyback programs.
Yahoo Finance Video
Costco Wholesale Corporation stock is trending on the Yahoo Finance Platform. Here is a visualization of $COST performance over time, how that performance compares to the wider industry, and analyst projections for the current quarter.Check out the ticker page here.
In this article, we discuss 10 best stocks to buy before recession begins. If you want to see more stocks in this selection, click 5 Best Stocks to Buy Before Recession Begins. Between 1929 and 1939, the period famously dubbed the Great Depression, global economies suffered from stock market crashes, sharp declines in output, high […]