Billionaire quant Cliff Asness says conflicting signals around the Fed's next move could cause a 'scary' sell-off in stocks as recession strikes
Stocks and bonds are sending conflicting signals about the economy — and there could be a scary sell-off in stocks if a recession hits, according to billionaire investor Cliff Asness.on Monday, the quant guru pointed to different economic outlooks priced in the bond market and in the stock market, which he called his"biggest concern" in the current macro environment.
Though stocks are being carried by a more buoyant outlook on the economy, the bond market is pricing in steep interest-rate cuts over the next few years, whichThe bond market is currently forecasting a more-than-mild recession given the pace of expected rate cuts, Asness said. If the US does see a downturn, that could spark a steep sell off in the stocks, he warned.
"If inflation stays sticky or it comes down because we enter a nontrivial recession – it's equities that I think are in a scary place," he added. 'They're not priced very consistently with bonds." Economists have been flagging the risk of recession over the past year, as the central bank aggressively raised interest rates to tackle high inflation. High rates threaten to
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