Wall Street veteran Peter Kraus said investors should not be caught off guard by a market correction, as some stocks have been pushed into the bubble area and many catalysts for expansion have already been taken into account.
“You have to watch for those bubbles, and the market could easily have a consolidation of 10% to 15% and no one should be surprised,” the founder of Aperture Investors said in a Bloomberg Television interview Friday. While many investors think US President Joe Biden will implement a major aid package, “there’s already a lot of the incentive in the price.”
Kraus joins those raising the alarm about bubbles after retail investors like GameStop Corp. and AMC Entertainment Holdings Inc. have driven up, causing volatility between different stocks. Kraus, former co-head of the asset management division of Goldman Sachs Group Inc. and chief executive officer of AllianceBernstein Holding LP, founded his new firm more than two years ago, and his comments came as stocks hit new highs. He too renewed a warning about inflation.
“The amount of stimulus that the US government is actually going to put into the economy is likely to be north of $ 5 trillion. The Fed’s balance sheet has doubled, ”he said. “All of this cannot happen without affecting inflation. And if inflation goes up, real interest rates could even turn positive, and that will impact stocks that are overvalued. “
– With the help of Guy Johnson and Kailey Leinz