Longtime activist investor Carl Icahn doesn’t think cutting the interest rate will do much for the economy.
The Federal Reserve recently lowered rates by a quarter point, though many in the market had expected it to do more, sooner.
Speaking on CNBC’s Fast Money Halftime Report, Icahn remarked that this isn’t a simple problem to solve. Rate cuts are not the panacea everyone thinks they are for the economy.
“If it were that easy, you’d never have these cycles,” Ichan said, referring to inflationary cycles.
This is the first rate cut by the Fed in more than 10 years.
Fed Chairman Jerome Powell called the move a “mid-cycle adjustment,” citing global economic changes and “muted” inflation giving rise to the decision.
“There is an argument for cutting rates, but you look at Europe, I mean, they cut their cuts to negative, and look at the economy over there, so I don’t think that’s the final answer to the problem.”
The billionaire investor believes that the real importance lies with reaching a trade resolution with China. We’re in a state of record economic expansion and we shouldn’t be limiting that to a futile trade war, he contends.
China trade resolution?
Icahn believes that the China trade wars are of central importance before anything else. It’s affecting a number of stable areas of economic growth both in the United States and beyond.
“I think you really have to settle the China problem. … The China problem is not just having repercussions for us, it has repercussions throughout the world.”
Tensions increasingly have mounted as the U.S-China trade war, promoted by President Trump as “good” and “easy to win” has worn on for two years.
China’s International Monetary Fund Executive Director Jin Zhongxia agrees that this is a no-win situation for both countries and the world at large.
“China and its trading partners should work cooperatively and constructively to settle their disputes in a rules-based multilateral framework and make joint efforts to reform the WTO in a good faith and win-win approach,” he said in a press statement.
Small-cap winners galoreThe big stock market winners share one common attribute: Near the beginning of the ascent of their shares, the companies offer revolutionary products or services, are market leaders in their respective industries, or both. Some big stock market winners that possessed the attributes outlined above are Netflix (NFLX), which we recommended to investors in October 2002; Intuitive Surgical (ISRG), which we bought and recommended in July 2004; Baidu.com (BIDU), which we bought and recommended in August 2006; and MercadoLibre (MELI), which we recommended to investors in October 2010. Get up-to-date small-cap stock picks from David Frazier, editor of Small-Cap Profit Confidential.
Smarter cryptocurrency investmentsThe stock market crash of 2008 was the catalyst for his journey into alternatives. And interestingly, it was the impetus behind the creation of Bitcoin and the blockchain technology behind it. Keene Little wasn’t ready to risk his money yet but he was very curious, so he began charting Bitcoin’s technical patterns. What finally convinced him to dip a toe into digital currencies was seeing that they followed familiar price patterns that could be analyzed and successfully acted on. Now he shares those insights with subscribers to the Crypto Wealth Protocol.