Need to Know: Powell won’t stop rate hikes until he ‘terrifies’ the wealthiest of investors, says this CIO

by | Jan 9, 2023 | Stock Market

Investors are waking up to a whiff of positivity where stocks are concerned, after last week’s first gain in five that was prompted by weak wage growth. Alongside a bleak Institute for Supply Management services survey, the data is sending the message to some that the Fed now has more evidence to start winding down its tightening cycle.

But not so fast says our call of the day. It comes from Eric Peters, the chief investment officer of One River Asset Management, who was chatting with a fellow CIO who offered up his own line in the sand for when Fed Chairman Powell will put on the brakes. “Prepandemic a heavy jet cost $7k-9k an hour to charter. Now it costs $18k-$20k,” the unidentified CIO told Peters and noting that his own private indicators that show a still white-hot market. “All these guys worth $100mm got sucked into a portfolio mix with 75% illiquid investments, 25% liquid. Guys like that spend $3mm-$5mm year and make $2mm after tax. They’re slowly bleeding, but even after last year are not yet scared,” he said. “Powell won’t finish tightening the tourniquet until he terrifies these guys,” he s …

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