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

Published 05/02/2021, 17:34
Updated 05/02/2021, 19:45
© Reuters

(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

Hedge funds are wishing! Reality is that retail investers own the markets now, step aside old dudes! We only just getting started!
We cant be in a depression which we are in and not be in a market bubble, if the the market and economy was generally prospering then there would not be 100,000’s if not millions of job losses and completely stupid furlough schemes which are just delaying the inevitable. Which is massive amounts of poverty and destitution. The stock market is a completely false representaion of the true market position of the market, when the mask comes of which is this bubble created by investments from false valuation the truth will become clear which will be a decrease in market value of at least 15-20.
Venezuela market welcomes
yes if there is a correction, on the charts 15% looks a clear target, and nobody should be surprised.however there is a massive broadening top pointing to a long way down.i currently dont see how the market goes down 50%, but if it does its going to be an almighty crash.
Nothing is free all that printing money costs. No job creation just losses! who and anyone could justify this bubbles when everyone jobless no Money No jobs, no future!!seems all BIG bubbles about the burst! leave o lot of on losses 📉!!!
We cant be in a depression which we are in and not be in a market bubble, if the the market and economy was generally prospering then there would not be 100,000’s if not millions of job losses and completely stupid furlough schemes which are just delaying the inevitable. Which is massive amounts of poverty and destitution. The stock market is a completely false representaion of the true market position of the market, when the mask comes of which is this bubble created by investments from false valuation the truth will become clear which will be a decrease in market value of at least 15-20.
Nobody seems too concerned.
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