Source: Wall Street News
Author: Bu Shuqing
“We’ve put ourselves in a bind,” said Mark Spitznagel, who bucked the 2008 financial crisis and made outsized returns.
More and more Wall Street bigwigs have reached a consensus on being bearish on the U.S. economy.
Mark Spitznagel, chief investment officer of the “black swan” fund Universa Investments, said in an interview with the media that the financial system is most vulnerable to “the biggest credit bubble in human history”.
“If this bubble burst, it would be the most catastrophic market failure anyone has ever seen — but let’s hope that doesn’t happen.” “We’ve put ourselves in a bind.”
Spitznagel insists he is not a doomsdayist. He has long criticized the central bank for keeping interest rates close to zero or even negative, which he says drives up asset values and encourages excessive borrowing. Currently, central banks around the world are tightening monetary policy to fight inflation.
Traditional safe-haven assets such as U.S. Treasuries and gold have disappointed investors this year, adding to the pain, Spitznagel said.
Before his warning, the big Wall Street banks had been alerting investors one by one:
A former Wells Fargo CEO said that the U.S. economy is difficult to avoid a certain degree of recession;
Later, JPMorgan Chase CEO Dimon warned that the U.S. economy is facing unprecedented challenges and investors should prepare for the coming “economic storm”;
On Friday, local time, Goldman Sachs Group President John Waldron also issued a warning, saying that the future will enter a difficult period due to a series of shocks to the global economy.
“Black swan” funds typically employ a “tail risk strategy,” betting that a catastrophic event will cause a sharp shock to the stock market or cause inflation to soar. Universa’s goal is to preserve client assets and protect them from losses when a “black swan” event pulls the market down.
Fifteen years ago, Universa, which was just established, took a heavy position and shorted U.S. stocks in advance. In the financial tsunami of 2008, many well-known investment institutions including Warren Buffett and Bridgewater failed, and Universa bucked the trend and achieved a rate of return of more than 100%. The battle also made Spitznagel and Universa famous on Wall Street.
In addition, in the early days of the outbreak in 2020, when the global financial market was bloodbathed, Universa stood out again, achieving a net return of 36 times in March.
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