“A rally like this is of course very dramatic to say the least… but I still think we are in a bear market.”
That was Wall Street icon Carl Icahn, speaking to CNBC after Thursday’s softer-than-expected inflation report that sparked the best day for stocks since early 2020. The Dow industrials
DJIA,
closed up 1,200 points, while the yield on the 10-year Treasury note
TMUBMUSD10Y,
tumbled 33 basis points to 3.828%.
The co-founder of Icahn Enterprises
IEP,
said he would keep his portfolio “hedged,” as he still sees a recession as likely and inflation not “going away, not in the near term.”
Thursday’s data showed October headline inflation down on a year-over-year basis to 7.7%, while the year-over-year core number fell to 6.3%, though echoing Icahn, economists said it would take longer for prices to truly cool down.
Futures are now pointing to the Fed’s terminal rate peaking at 4.9% next June, with chances of a 50 basis point hike by the Fed at its December meeting up to 85%. Earlier this week those expectations wavered between a 50bp and 75bp hike.
Icahn said inflation stickiness was largely down to wage inflation, as a “lot of people don’t want to work.” Drawing on his experience of living through high prices in the 1970s, the investor reminded that it can take “years and years” to get past that. He added that the Federal Reserve was “late to the game” with its interest rate increases to combat high prices.
Icahn appeared to be sticking of a grim view he gave to MarketWatch in September, when warned that the “worst was yet to come” for the economy. “We printed up too much money, and just thought the party would never end. And the party’s over,” he said at the time.
