Sam Zell’s low-interest rate caveat is throwing the cat among the pigeons who advocate slashing interest rates to keep the economy fuelled.
Sam Zell, an American real estate magnate and on the Forbes rich list with a personal net fortune of 5.1 billion USD is known for not mincing his words. Sam Zell, is a billionaire investor with a diverse investment portfolio spanning commercial real estate, energy, manufacturing.
Sam Zell’s low-interest rate caveat was recently put forward on the business cable news channel, CNBC.
“There is an attempt to take the dollar out of the reserve currency status…I think that would be a disaster to the US, I think that would be the biggest risk of playing with interest rates”
Sam Zell’s low-interest rate caveat is a dig at those supporting a slash to interest rates
US President Trump has been leading the charge for a cheap money Fed with a series of Tweets. Trump recently suggested that the Fed should slash its benchmark rate by 1 percentage point, which would take it to a range of 1.25% to 1.5%. The President claims that lower interest rates would help the economy to “go up like a rocket ship”.
Sam Zell’s low-interest rate caveat suggests otherwise, it waves a red flag regarding Trump’s desire to slash interest rates which could ultimately end in ‘a disaster’
Sam Zell argues that the long-range impact of a cheap money Fed would be a walk into the abyss, it would create a systemic crisis.
It would be “a disaster” that would threaten the dollar’s status as the world’s reserve currency, argues Sam Zell.
“There is an attempt to take the dollar out of the reserve currency status” Zell said. “I think that would be a disaster to the US I think that would be the biggest risk of playing with interest rates”.
“The President claims that lower interest rates would help the economy to go up like a rocket ship”
A threat to the dollar’s status would have a wide-reaching impact on Americans across the social spectrum, from those buying grocery shopping with food stamps to billionaires with private jets in their hanger topping up with jet fuel.
Sam Zell’s low-interest rate caveat has also been echoed by another successful investor
Carl Icahn recently condemned modern monetary theory (MMT) as a solution to the anticipated economic downturn. Carl Icahn also warned that interest rate slash could cause an inflationary spiral.
But billionaire investors being rattled by cheap money is somewhat of a paradox, bearing in mind that it is low-interest rates which aid and abet speculative investments and capital accumulation.
Sam Zell’s low-interest rate caveat along with Carl Icahn warning of a Weimar Republic hyperinflation could be interpreted that monetary easing, more cheap money to reflate asset prices in the next downturn is done.
“I’m having a tough time correlating the negative headlines on the business environment and the reality of what we see” – Sam Zell
Sam Zell’s low-interest rate caveat is at odds with Trumps’ cheap money campaign
Nevertheless, Sam Zell believes that Trump is doing a good job on the economy.
“I’m having a tough time correlating the negative headlines on the business environment and the reality of what we see” said Sam Zell.
Sam Zell also praised President Trump for taking on China in trade. “ It should have been done years ago”, he said.
“If the economy is going to continue to prosper the way it is now, I don’t think there’s any doubt that President Trump is going to get reelected,” he added.
Dan Loeb targets Sony. Dan Loeb is an activist investor and founder of Third Point, which oversees about $14.5 billion in assets.
Last year the activist investor viewed Campbell soup as a bargain when Third point reported that the soup maker could fetch a takeover value of $52 to $58 per share.
A year later and the activist investor Dan Loeb targets Sony
Dan Loeb's activist hedge fund Third Point is raising an investment vehicle to generate between $500 million and $1 billion so it can continue to buy Sony shares, according to a recent report in Reuters.