Veteran investor and bitcoin bull Michael Novogratz does not have a rosy outlook for the economy, which he described as headed for a significant downturn, with the potential for a “sharp recession” on the horizon.
“The economy is on the verge of collapse,” Novogratz told MarketWatch. “We’re going to go into a really quick recession, and you can look at it in a number of ways,” he said in an interview on Wednesday, before the Federal Reserve decided to implement its biggest rate hike in nearly three decades. “
“Housing is starting to roll in,” he said. “Inventory exploded.”
“There are layoffs in many industries and the Fed is stuck,” he said, with conditions for “growth.” [interest rates] Until inflation is over.”
Central bank policymakers agreed on an unusual 0.75 percentage point hike, ending the two-day monetary policy meeting with a move that would raise the Fed’s interest rate to between 1.5% and 1.75%. will increase the limit. Because it is stepping up efforts to lower the inflation rate, which is hovering around a 40-year high.
This was the largest rate hike by the central bank since November 1994.
Before the Fed announced its decision, Novogratz estimated – correctly, it turns out – that the central bank would hike rates by 75 basis points and the market would rally on the news. He also predicted that stocks would sell off in the coming days.
“You’re walking into the bursting of a bubble,” Novogratz said, referring to the rising prices for Swiss luxury watches and other real estate.
So far, the well-known investor’s prediction has come true, with the Dow Jones Industrial Average (DJIA) up more than 300 points, or 1%, following the collapse of the Fed meeting and a +1.00% news release, taking its gains to 600 has expanded points. Shortly after running. The conference was underway and organized by Speaker Jerome Powell.
The S&P 500 SPX was up about 55 points, or 2.5%, +1.46%.
The Nasdaq Comp, +2.50%, gained the best of the two, up 2.5%.
On Tuesday, Novogratz, CEO of crypto merchant bank Galaxy Digital BRPHF, +12.33%, drew parallels between the 1998 collapse of the highly leveraged LTCM fund and the current impact on assets like Bitcoin BTCUSD, +3.69% and Ether ETHUSD . +3.55% on the Ethereum blockchain.
The collapse of Long Term Capital Management sent shockwaves through global financial markets, eventually necessitating multi-billion dollar bailouts from Wall Street banks.
Key term: Crypto Victim “Long Term Capital Management Moment”: Michael Novogratz