Billionaire investor who predicted 2008 crisis and post-COVID inflation spike sees ‘significant’ recession risk and prolonged period of low asset returns

paul singer

Paul Singer, Elliott ManagementREUTERS/Steve Marcus

  • Paul Singer sounded the recession alarm and warned of a long period of low returns.

  • The hedge fund manager said the US economy was facing an “extraordinarily dangerous and confusing time”, according to the WSJ.

  • Singer previously called the subprime mortgage crisis and warned of the post-Covid inflation spike.

Billionaire hedge fund owner Paul Singer has warned investors of a prolonged market cycle of low returns in financial assets as recession risks continue to mount.

In an interview with the editorial page of the Wall Street Journal, the founder of Elliott Management and one of the world’s most notable fund managers said the US economy was facing an “extraordinarily dangerous and confusing time”. .

Financial markets face a host of hurdles on top of an already challenging macroeconomic environment as the Federal Reserve and other central banks continue to raise interest rates to combat stubbornly high inflation.

“Valuations are still very high. There is significant downside risk,” Singer said. “We see the possibility of a long period of low returns in financial assets, low returns in real estate, corporate profits, higher than current unemployment rates and a lot of inflation in the next round.”

And if the next recession hits, central bankers will ease monetary policy again, thinking inflation is under control, he added. But inflation will return, perhaps even more than before, which means rates will have to rise for longer, he said.

Singer was one of the first to call the subprime mortgage crisis in 2008 and warned of high inflation at the start of the Covid-19 pandemic.

In an April 2020 letter to investors, Singer said, “We believe central bankers are highly unlikely to decide to normalize monetary policy after the current emergency ends…The world has clearly close to a tipping point after which money printing, prices, and debt growth are in an upward spiral that monetary authorities realize can only be broken at the cost of a deep recession and of a credit crunch.”

This story was originally published on April 10, 2023.

Read the original article on Business Insider

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