Carl Icahn Predicts Recession, Bets vs U.S. Malls, Real Estate
Billionaire investor Carl Icahn anticipates a US recession or "even worse" ahead. Icahn told CNBC he isn't sure the Fed can engineer a "soft landing" in tackling high inflation, Shalini Nagarajan reported for Business Insider. To protect against a possible recession, Icahn is betting against malls and commercial real estate.
Photo Insert: An illustration of Carl Icahn
A recession refers to a period of a significant economic downturn across an economy that lasts for more than a few quarters. This can be seen in a slump in the gross domestic product. "I have kept everything hedged for the last few years," he added.
"We have a strong hedge on against the long positions, and we try to be activist to get that edge ... I am negative as you can hear. Short term, I don't even predict."
The activist investor, whose net worth is estimated at $22.7 billion, is known for purchasing significant stakes in a company, to either completely overhaul the board or set a new path aimed at delivering more shareholder profit. In the face of a potential downturn, Icahn has a very large position against malls and commercial real estate.
"You can't ignore the fact — and I don't know if this is a change that will continue — but you don't have people going to offices all the time anymore, obviously," he said. Soaring inflation was already a key threat to the US economy, but Russia's war has only exacerbated the outlook, he said.
The Federal Reserve last week took its biggest step yet toward cooling inflation by raising its benchmark interest rate by 0.25 percentage points, ending a two-year period of near-zero rates.
Fed Chair Jerome Powell this week signaled even more aggressive rate hikes will come if needed, comments that sparked a sell-off in the bond and equity markets.
"I really don't know if they can engineer a soft landing," Icahn said about the Fed. "I think there is going to be a rough landing."
The activist investor pointed to continuing supply-chain problems as a driving factor in persistent inflation.