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« Should We Really Put Gold in an IRA? | Main | More Unofficial Capital Controls: PFIC Rules »
Monday
Apr062015

Hedge Fund Legend Julian Robertson Warns Of A "Complete Explosion" Unless Fed Contains "Boiling, Bubble" Market

Julian Robertson

Legendary hedge fund manager Julian Robertson, who has been conspicuously absent from CNBC in recent months, spoke with Fox Business' Maria Bartiromo about his take on markets. He was hardly bullish, which may explain his absence from the cadre of CNBC bubble cheerleaders.

Robertson (in addition to some generic comments on the weather impacting the jobs numbers: apparently the weather only impacted the warmer March, not the freezing January and February) said that "the thing that worries me the most are the twin bubbles that are developing, certainly the Federal Reserve, the people that run their Treasury operations, are trying to create a bubble in bonds and they are doing it."

The other implied bubble of course is that of stocks, because with no upside left in bonds, capital appreciation starved investors have no choice but to go into stocks which as of today just hit 21x on a forward GAAP PE multiple surpassing even David Tepper's 20x bogey.

Asked how the bubble will end, Robertson notes that "nobody knows when bubbles are gonna burst. As a child when you are blowing a bubble you don't know when it's gonna burst and that's part of the fun of the "bubble" bubbles, but this is more serious and I am very worried about it"

Will a bursting bond bubble disrupt the equity rally? Robertson is honest enough intellectually to admit that bond and stock bubbles are connected and says that a bursting bond bubble will crush stocks and the Fed is "frightened to death" over fears a plunge in stocks will also crush the economy.


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