Billionaire Investor Howard Marks Predicts Federal Reserve Won’t Be

The cofounder of Oaktree Capital Management says “it’s still Groundhog Day” for investors—with market conditions little changed from several months ago as stocks remain near record highs despite rising inflation worries.

The U.S. economic recovery that began in late 2020 “remains underway” and stocks have continued their meteoric rise since March 2020, but “there is still no consensus” on whether higher inflation will prove transitory or long-lasting, Marks said. 

Worries about rising inflation are “well founded thus far,” though it also remains unclear whether the current surge is caused by the Federal Reserve’s monetary policy or ongoing supply chain and labor market bottlenecks.

While the central bank’s job has historically been to control inflation and oversee economic growth, the Fed has in recent years “taken on the additional task” of boosting markets higher by lowering interest rates and injecting massive amounts of liquidity into the economy, Marks described.

The billionaire investor was also critical of progressive Democrats who opposed the nomination of Jerome Powell for a second term as Fed chairman for his lack of action in addressing climate change.

“So now we have a Fed that’s supposed to control inflation, foster growth and employment, support markets, and fight climate change—how many roles can one institution have and still maintain a coherent effort?” Marks asks.