Wall Street veteran Peter Kraus said investors should not be surprised by a market correction, as some stocks have been pushed into bubble territory and many catalysts for expansion have already been considered.
“You have to pay attention to these bubbles, and the market could easily consolidate from 10% to 15% and no one should be surprised,” the founder of Aperture Investors said in a Bloomberg television interview on Friday. Although many investors believe that US President Joe Biden will push a large aid package, “much of the stimulus is already in the price.”
Kraus joins those sounding the alarm over bubbles after retail investors raised shares such as GameStop Corp. and AMC Entertainment Holdings Inc., creating volatility between different stocks. Former co-head of asset management group Goldman Sachs Group Inc. and executive director of AllianceBernstein Holding LP, Kraus set up his new company more than two years ago, and his comments came as shares reached new heights. He, too renewed a warning about inflation.
“The amount of stimulus that the US government will actually put in the economy is probably north of 5 trillion dollars. The Fed’s balance sheet has doubled, “he said. “All this cannot happen without affecting inflation. And as inflation rises, real rates could actually become positive and this will have an impact on stocks that are overvalued. ”
– With the assistance of Guy Johnson and Kailey Leinz