Billionaire hedge fund boss Steve Cohen expects a short-lived recession and a brief market downturn.
According to Cohen, the downturn could resemble a “fake scare” that surprises investors.
Cohen maintains a “pretty positive” outlook on the economy with his hedge fund, Point72.
Steve Cohen, the billionaire chief of hedge fund Point72 and the owner of the New York Mets, has an optimistic outlook for the US economy and financial markets.
In a recent statement at the Robinhood Conference, as reported by Fortune, Cohen mentioned the possibility of a temporary recession hitting the US before the year’s end. He described it as a “fake scare” that may briefly unsettle investors, but its effects will not be long-lasting.
“It’s only going to be short-term in nature,” Cohen stated, emphasizing his firm’s positive perspective on the economy.
According to recent real gross domestic product data, the US economy experienced a 4.9% annualized growth rate in the third quarter. Cohen predicts that economic growth will continue to rise in 2024, potentially leading to a 3%-5% increase in stocks. This possibility could prompt the Federal Reserve to maintain higher interest rates than expected.
This view contrasts with the outlook shared by investing pioneer Rob Arnott, who cautioned against relying on the current signs of strength in the economy as a guarantee against a recession. Arnott argued, “Recessions always start with an economy that’s been booming. It’s the nature of the peak and the rolling over.”
Meanwhile, Jerome Powell and other central bank officials have expressed differing opinions on the path of monetary policy. Although inflation remains above the Federal Reserve’s 2% target, markets do not anticipate a rate hike in the coming months.
“Additional evidence of persistently above-trend growth, or that tightness in the labor market is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy,” Powell stated in October.
Read the original article on Business Insider.