Blackstone‘s chief investment strategist said on Tuesday that market expectations for Federal Reserve policy are too dovish, and it could lead to a 10% to 15% correction in equity prices.
Consensus estimates are for a quarter-point rate cut at the Fed’s meeting later this month, according to the CME’s FedWatch tool. However, Blackstone’s Joe Zidle said on CNBC’s “Fast Money ” that the market will want more cuts and be disappointed.
“If it’s just an insurance cut, if it’s just a one and done, then there’s nothing but downside for the markets, because the markets are sniffing out problems that I don’t think exist,” said Zidle, whose firm has about $512 billion in assets under management.
Zidle predicts that underlying growth data will keep the Fed from cutting multiple times this year, and says a tight housing market and tariffs could push inflation upward.
“You’ve got markets that are up 20% in the last six months on anticipation of an aggressive rate cut path,” Zidle said. “And yet…