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Wall Street Veteran Says Market Could Plunge 15%, Sounding Alarm About Bubbles

Published 02/05/2021, 12:34 PM
Updated 02/05/2021, 02:45 PM
© Reuters Wall Street Veteran Says Market Could Plunge 15%, Sounding Alarm About Bubbles

© Reuters Wall Street Veteran Says Market Could Plunge 15%, Sounding Alarm About Bubbles

(Bloomberg) -- Wall Street veteran Peter Kraus said that investors shouldn’t be caught off guard by a market correction because some equities have been pushed into bubble territory, and many catalysts for expansion have already been factored in.

“You’ve got to pay attention to those bubbles, and the market could easily have a consolidation of 10% to 15% and nobody should be surprised,” the Aperture Investors founder said Friday in a Bloomberg Television interview. Though many investors believe U.S. President Joe Biden will push through a large relief package, “a lot of the stimulus is already in the price.”

Kraus joins those sounding an alarm about bubbles after retail investors pushed up stocks such as GameStop Corp (NYSE:GME). and AMC Entertainment (NYSE:AMC) Holdings Inc., creating volatility among various equities. The former co-head of Goldman Sachs Group Inc (NYSE:GS).’s asset-management arm and chief executive officer of AllianceBernstein (NYSE:AB) Holding LP, Kraus formed his new firm more than two years ago, and his comments came as equities have hit new highs. He also renewed a warning about inflation.

“The amount of stimulus that the U.S. government is going to actually put into the economy is likely to be north of $5 trillion. The Fed’s balance sheet has doubled,” he said. “That all can’t happen without affecting inflation. And as inflation rises, real rates could actually turn positive, and that will be an impact on those stocks that are overvalued.”

©2021 Bloomberg L.P.

Latest comments

stimulus is an opioid. used with moderation it helps. but since 2010 so called dev. countries are just pushing the can. so...the price will be hyperinflation
Tulip Bulbs ?? Everyone ??
DJIA new (SPECULATIVE Target): $21,000 by 2023, at the latest.
Sameold, sameold.  Some guy trying to use the same old arguments: Common Sense says you can't keep inflating the balloon. Common sense, common sense.  Doesn't he know we voted that down in November??
We voted down Common Sense? You mean we voted FOR sanity and reason over chaos and misinformation?
Buyer's remorse is coming for the people who voted for Biden. BTW, misinformation is still being spewed upon us.
yep.. it's coming like a freight train.. JOEbama is the lowest common denominator...
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