The bear market rally won’t last, says fund manager David Neuhauser
Hedge fund manager David Neuhauser says markets are looking “artificially high” right now and are staging a bear market rally that won’t last. Neuhauser, founder and CIO of Livermore Partners, said the recent rebound was a technical rally off of the lows and not a sustained recovery in markets. “I think at this point you’re approaching the upper limits of this rally and I would expect it to taper off here in the coming weeks,” he told CNBC’s Squawk Box Europe on Friday. Major US indices have been in a bear market for much of this year — or down more than 20% from recent highs — with the S&P posting its worst first half since 1970. However, stocks rallied in July, and many on Wall Street debated whether the bear market was over. On Friday, the S&P 500 celebrated its fourth straight week of gains — its longest weekly winning streak since November 2021. However, Neuhauser argued it will be a temporary move higher. “I think ultimately we will most likely be in a bear market for some time. And I think the economy is going to go into recession – how deep, how far, how fast, it’s uncertain.” Why Neuhauser is so bearish on the markets Neuhauser said that the current market has not been based on fundamentals for a while, with “all the money that pumped the system”. In response to the coronavirus pandemic, central banks around the world have launched a campaign of ultra-loose monetary policy, although many have tightened in recent months. Therefore, Neuhauser said that the investment landscape has changed. “And I think until they really really understand this shift, markets are going to be pretty much range bound.” The Federal Reserve made its second straight 0.75 percentage point rate hike in July. And Neuhauser said he didn’t see “they taking their foot off the gas” and that politics was “only about half where it needs to be”. With interest rates rising, Neuhauser said higher borrowing costs will hit some weaker companies. “Valuations will eventually … fall back near the movement lows,” he added. “And I think it’s just going to create a much more challenging backdrop, not just for the next few months. I think that will continue for years to come.” How to position Livermore Partners is “heavily invested in commodities and particularly energy”. “We still think it was the only sector that was the right choice because it was underinvested, there were structural issues in terms of supply, strong demand and very high prices,” he told CNBC. Oil prices rose last year amid broad gains in most commodities and rose even further after the Russia-Ukraine war. Crude oil prices recently fell back below $100 a barrel but remain over 40% higher than a year ago. On the other hand, Neuhauser said he’s been negative on tech stocks for the past two years and it’s been “the right decision” this year.
https://www.cnbc.com/2022/08/15/the-bear-market-rally-wont-last-fund-manager-david-neuhauser-says.html The bear market rally won’t last, says fund manager David Neuhauser
