Veteran investor and
Bull Michael Novogratz doesn’t have an optimistic outlook for the economy, which he describes as heading for a substantial slowdown, with the likelihood of a “quick recession” on the horizon.
“The economy is going to collapse,” Novogratz told MarketWatch. “We’re going into a very quick recession, and you can see that in a lot of ways,” he said in an interview on Wednesday before the Federal Reserve decided to undertake its biggest ever interest rate hike. in almost three decades.
“Housing is starting to roll,” he said. “Stocks have exploded.
“There are layoffs in multiple industries, and the Fed is stuck,” he said, with the stance of having to “increase [interest rates] until inflation returns.
Central bank policymakers agreed to propose an unusual rate hike of 0.75 percentage points, capping a closely watched two-day policy meeting with a decision that would push the Fed’s benchmark federal funds rate higher. a range between 1.5% and 1.75% as it steps up its efforts to rein in an inflation rate that hovers around a 40-year high.
This is the largest increase in the central bank’s key interest rate since November 1994.
Before the Fed announced its decision, Novogratz speculated – accurately, it turned out – that the central bank would raise interest rates by 75 basis points and the market would rally on the news. He also predicted that the shares would sell off in the coming days.
“They’re walking towards a bubble bursting,” Novogratz said, referring to soaring prices for luxury Swiss watches and other assets.
Tuesday, Novogratz, Managing Director of Crypto Merchant Bank
drew parallels between the 1998 collapse of the highly leveraged fund LTCM and the current implosion of assets such as Bitcoin and
on the Ethereum blockchain.
The fall of Long Term Capital Management sent shockwaves through global financial markets and eventually necessitated a multi-billion dollar bailout by Wall Street banks.
This article originally appeared on MarketWatch.