Above: Billionaire investor Carl Icahn's new video: "Danger Ahead" in which he warns of the results of interest rates that have been kept too low for too long, saying stocks could go down "a lot more" as the market comes to grips with bubbles exacerbated by the Fed's zero interest rate policy.
Carl's five major worries:
- Low interest rates
- Tax loopholes
- Financial engineering of earnings
- Stock buybacks that weaken balance sheets
- The high-yield bond market.
- Icahn told CNBC the US Federal Reserve "may have backed itself into a corner." Icahn argues the Fed should have hiked interest rates months ago, but doing so now is harder given China's weakness and other emerging markets.
- Corporate earnings are "suspect," driven by low interest rates more than anything else--"Instead of taking the money that they can borrow and really invest it in machinery, in their workers to make them more productive, what they do with the money is almost perverse. They just go in and buy another company to show analysts on Wall Street that earnings are going up, so their stock will go up and it's financial engineering at its height."
- Tax reform is needed on the issue of inversions and the repatriation of foreign profits.
See also on Domain Mondo:
- Did The Fed Just Signal A Deteriorating Global Economy Into 2016 (videos) Sept 17, 2015
- Wall Street and the World Are Watching: Will the Fed Make Its Move Now? Sept 16, 2015
- ICANN is to Domain Names what Carl Icahn says Marc Andreessen is to Corporate America (video) Oct 10, 2014