Andrew Harrier | bloomberg | Getty Images
Greenlight Capital’s David Einhorn said on Wednesday that he remains negative on the stock market as inflation and interest rates could rise.
“I think we should bearish in terms of stocks and expect optimism about inflation,” Einhorn said on CNBC’s “Halftime Report” on Wednesday. “I think we’re pursuing a policy right now, which is probably very good for Main Street, but it’s going to be increasingly difficult and difficult for financial assets.”
The stellar hedge fund manager believes the Federal Reserve can do more to combat stubborn price pressures, and raise interest rates above consensus expectations.
“I think both the long-term and short-term rates are trending higher and probably higher than people expect,” Einhorn said.
Treasury yields have risen over the past year on the back of a series of interest rate increases. The benchmark 10-year Treasury yield on Wednesday topped 4% for the first time since November. Short-term interest rates moved higher, with six-month and one-year yields exceeding 5% for the first time since 2007.
“The Fed wants lower stock prices,” Einhorn said. “They’ve made that clear.” “I think it would be better if they didn’t care about the stock market either way.”
Einhorn just had an “exceptionally good year” with a 36.6% return in 2022, thanks in part to his short position in a slew of innovative technology stocks like those described by growth investor Cathy Wood.
The hedge fund manager said in a recent investor letter that in many ways 2022 was his best year ever and that the period was more comparable to 2001, the year after the last tech bubble popped. He also revealed that he is still abbreviating some “bubble” names.
The widely followed investor said his hedge fund is net long by a relatively small amount and has strong conviction in the value choices in its portfolio.
“I have a very conservative view of where the market as a whole will go, but I am very excited about a number of the positions in my long portfolio because they are ridiculously inexpensive and return tons of capital,” said Einhorn.
At the end of 2022, Greenlight’s largest long position included Green Brick Partners, Brighthouse Financial and CONSOL Energy. He previously said that the significant winners in his hedge fund in 2022 are Atlas Air Worldwide, Console Energy, Tech Resources and Twitter Arpplay.
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