Legendary investor Carl Icahn said Thursday’s Wall Street rally did not change his negative view on the market, and he believes a recession is still lurking on the horizon, according to a CNBC report.
“We keep our portfolio hedged. I am still very, quite bearish on what is going to happen. A rally like this is of course very dramatic, to say the least... but I still think we are in a bear market,” Icahn said.
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The headline consumer price inflation for October came in at 7.7%, versus 8.2% in September, below analyst estimates of 8%. As a result, the Dow Jones Industrial Average rose over 1,200 points on Thursday, its biggest one-day rally in over two years, while the Nasdaq Composite gained 7%.
The SPDR S&P 500 ETF Trust SPY ended Thursday’s session over 5% higher, while the Vanguard Total Bond Market Index Fund ETF BND gained over 2%.
Bear Market Rallies: Icahn believes big bear-market rallies occur often due to the large short interest built up in the downturn.
“Inflation is not going away, not in the near term. We are going to have more wage inflation. A lot of people don’t want to work,” Icahn said, according to the report.
The veteran investor believes that the U.S. Federal Reserve came in late to tackle inflation and that it is not over yet.
“I think they [Fed] came late to the game to raise interest rates. But I don’t think the inflation is over... I lived through the 70s. It took years and years and years to get it over with. You can’t wave a magic wand to get inflation over with," Icahn said.
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