US 'heading into a very serious recession' later this year, venture capitalist warns
Markets experiencing ‘worst downturn’ since dot-com crash: Venture capitalist
Craft Ventures co-founder and general partner David Sacks warns of a recession later this year.
Craft Ventures co-founder and general partner David Sacks warned on Thursday that the U.S. is headed for a "very serious" recession later this year as markets have been experiencing the "worst downturn since the dot-com crash."
The dot-com bubble was a quick rise in U.S. equity valuations mostly due to investments in Internet-based companies in the late 1990s.
"The reason why sentiment is so negative is because the market has sort of collectively realized that the highs that we saw last year were artificial," Sacks told "Mornings with Maria" on Thursday. "They were the result of the Fed and Congress and the administration pumping $10 trillion of liquidity into the marketplace."
"That resulted in inflation and now the Fed has to raise interest rates," he continued.
"And so over the last six months, there has really been a collapse in valuation levels as people realize that we’re not going to be in this low interest rate environment forever."
People worried about recession: Citigroup exec
Citi’s Institutional Client Group Chairman Leon Kalvaria argues that at the end of the day, a recession comes from the consumer side of the equation.
On Tuesday, Federal Reserve Chairman Jerome Powell reiterated his commitment to curbing the highest inflation in decades, indicating the central bank will raise interest rates as high as necessary in order to tame consumer prices.
INFLATION SOARS 8.3% IN APRIL, HOVERING NEAR 40-YEAR HIGH
Fed policymakers hiked the benchmark federal funds rate by a half point earlier this month, and Powell has all but promised that two, similarly sized increases are on the table at the forthcoming meetings in June and July. He echoed that sentiment on Tuesday as the Fed races to catch up with runaway inflation and bring it back down to the 2% target.
"You’ve seen over the last six months something liking 14% of global wealth has been vaporized," Sacks noted. "If you go back to 2008 and the global financial crisis, it was at 18%, so you are almost at a level of wealth destruction that we haven’t seen since 2008."
We and our partners use cookies on this site to improve our service, perform analytics, personalize advertising, measure advertising performance, and remember website preferences.Ok