Billionaire investor Carl Icahn compares US inflation to the autumn of the Roman Empire, warning buyers the ‘worst is but to come back’

All through 2022, Wall Road has repeatedly warned buyers {that a} recession might be coming.

From JPMorgan Chase CEO Jamie Dimon to former Federal Reserve officers, the world’s high financial minds have, in digital unison, pointed to the headwinds going through the worldwide economic system and expressed fears about the potential of a pointy downturn.

In America, customers are combating nearer 40 years of excessive inflation And because the world struggles to deal with rising rates of interest, the warfare in Ukraine, the European vitality disaster, China’s covid-zero insurance policies and extra.

After a greater than 21% drop within the S&P 500 this yr, the perfect minds on Wall Road nonetheless suppose shares will fall.

“The worst is but to come back,” Carl Icahn, who serves as chairman of Icahn Enterprises and has a web value of $23 billion, advised MarketWatch on the Finest New Concepts on the Cash Pageant on Wednesday.

Icon made his title as a company raider on Wall Road within the Nineteen Eighties, shopping for up unloved corporations and aggressively advocating change to enhance shareholder worth by appointing board members, promoting property or firing staff.

At 86, Icon stays one in every of Wall Road’s most revered minds, and this yr he has repeatedly warned that the U.S. economic system and inventory market are in hassle.

Traders argue that the Federal Reserve pushed asset costs unsustainably excessive amid the pandemic by utilizing near-zero rates of interest and quantitative easing — a coverage through which central banks purchase mortgage-backed securities and authorities bonds in hopes of stimulating credit score and funding.

“We printed more cash and thought the occasion would by no means finish,” he stated, including that he now believes the “occasion is over” with the central financial institution elevating charges to struggle inflation.

Based on Ikon, the excessive inflation is a hangover from the central financial institution’s free financial insurance policies, which rose 8.3% in August from a yr in the past.

“Inflation is a horrible factor. You may’t remedy it,” stated Icon, including that rising inflation was one of many principal components that led to the autumn of the Roman Empire.

Rome famously skilled hyperinflation after the emperors devalued their forex, the denarius. The state of affairs worsened dramatically after Emperor Diocletian instituted worth controls and a brand new coin, the argentius, equal to 50 denarii.

Based on the estimates of some historians, because of the unsustainable insurance policies of the Roman emperors, AD Between 200 and 300 there was 15,000% inflation.

Icahn stated he want to see the Federal Reserve elevate rates of interest by a full 1% as an alternative of a 75-basis-point hike on Wednesday, as such inflation worries him extra. Not caught.

However regardless of Icahn’s inflation fears, the billionaire investor stated he was in a position to outperform his friends by controlling his portfolio — which makes use of derivatives to restrict market danger and maximize income — throughout market downturns.

Icahn Enterprises’ web value rose 30%, or $1.5 billion, within the six months to 2022.

On Wednesday, Icahn argued that there are nonetheless engaging shares out there in the present day, however he warned buyers to not get too grasping too quickly.

“I believe lots of issues are low cost, and they will get cheaper,” Icahn stated, arguing that corporations within the oil refining and fertilizer companies ought to outperform the general market going ahead.

Wednesday’s warning to buyers was not the primary from Ichaun this yr.

The billionaire, who warned again in September that the U.S. economic system might be in recession or “worse,” in contrast in the present day’s excessive inflation to that of the Nineteen Seventies.

“That genie cannot be put again within the bottle very simply,” he stated.

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