Carl Icahn sees danger ahead. The activist investor is quoted as saying to CNBC’s Scott Wapner that a low interest rate environment has caused asset prices to rise above levels that can be supported by the underlying fundamentals. Icahn sees bubbles in art, real estate and high-yield bonds – with potentially dramatic consequences.
[via CNBC] “It’s like giving somebody medicine and this medicine is being given and given and given and we don’t know what’s going to happen – you don’t know how bad it’s going to be. We do know when we did it a few years ago it caused a catastrophe, it caused 2008. Where do you draw the line?”
In a telephone interview, Icahn told Wapner he is “more hedged now than I’ve been in years.”
Icahn has clearly a valid point considering that in the past, from a historical context, bubbles are formed during periods of ultra-accommodative monetary policy, or low interest rates and increased supply of money.
“The Fed may have backed itself into a corner. They should have absolutely raised rates six months ago,” noted Icahn, adding it’s difficult now because of global concerns.