Carl Icahn says he nonetheless thinks we’re in a bear market regardless of Thursday’s rally

Famed investor Carl Icahn stated Thursday’s reduction rally did not change his adverse view in the marketplace, and he believes a recession continues to be on the horizon.

“We preserve our portfolio hedged,” Icahn stated on CNBC’s “Closing Bell Time beyond regulation” Thursday. “I’m nonetheless very, fairly bearish on what’s going to occur. A rally like that is after all very dramatic to say the least… however I nonetheless assume we’re in a bear market.”

Shares staged an enormous comeback after October’s studying of shopper costs fueled bets that inflation has peaked. The Dow Jones Industrial Common jumped 1,200 factors for its greatest one-day achieve since Might 2020. The S&P 500 jumped 5.5% in its greatest rally since April 2020.

Huge bear-market rallies happen typically due to the massive brief curiosity constructed up within the downturn, Icahn stated. Whereas the inflation report confirmed some indicators of easing, the founder and chairman of Icahn Enterprises believes worth pressures are sticker than most assume due to wage will increase.

“Inflation is just not going away, not within the close to time period,” Icahn stated. “We’re going to have extra wage inflation. Lots of people do not need to work.”

The mix of upper rates of interest and an inverted yield curve led Icahn to imagine {that a} recession is inevitable, he stated.

The buyer worth index elevated 0.4% for the month and seven.7% from a 12 months in the past, in comparison with respective estimates from Dow Jones have been for rises of 0.6% and seven.9%. The Federal Reserve has been deploying a sequence of aggressive rate of interest hikes in an effort to convey down inflation working round its highest ranges because the early Nineteen Eighties.

“I feel the Fed did what they needed to do,” Icahn stated. “I feel they got here late to the sport to boost rates of interest. However I do not assume the inflation is over….I lived by the 70s. It took years and years and years to get it over with. You’ll be able to’t wave a magic wand to get inflation over with.”