Tags: david neuhauser | fed | reactionary | hedge fund

Hedge Fund Manager David Neuhauser: Fed 'Has Been Too Reactionary'

(Livermore Partners)

By    |   Thursday, 13 June 2019 06:35 AM

David Neuhauser, managing director at Livermore Partners, told Newsmax TV that the Federal Reserve “has been too reactionary” in its rate-setting strategy.

The Federal Open Market Committee, the central bank’s rate-setting group, is scheduled to meet June 18-19, with financial markets pricing in at least two rate cuts by year-end, after tepid consumer price data on Wednesday and recent employment data were seen as further indications the U.S. economy may be losing steam.

Going forward, Neuhauser suggested to Newsmax TV host John Cardillo that the nation’s central bankers use a hockey strategy and think in a much more pro-active manner.

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“They should look at where the puck is going not where it's been,” Newhauser recently told “America Talks Live.”

“I think the Fed has been a bit too reactionary,” said Neuhauser, whose Livermore Partners helps manage $100 million.  

“They were tightening as late as last year and seemed to be looking at further tightening. And then, since the past number of months, there's been a complete 180 on their part,” said Neuhauser, whose fund averaged a 40% first-quarter return in its best year since 2016.

“And now you're starting to see them put their car in reverse and look at the potential, at least, of rate cuts,” he said.

“The economy, for the most part, is going fairly well. But if you look at our rates here in the United States versus the rest of the world, others are devaluing their currency. And here, we've had Fed rate hikes, which has strengthened the U.S. dollar," he said.

Neuhauser predicts that situation will reverse itself in the next few years.

Neuhauser also doesn't see the nation's central bank caving into pressure from President Donald Trump and Commerce Secretary Wilbur Ross, who both have criticized the Fed's December rate hike.

"The Fed is acting independently. I think they'll continue to be independent and watch the data," he explained. "That said, I think some of the influence that the president has in terms of the tariff war will obviously impact the economy the longer it goes on, the longer the uncertainly exists," Neuhauser said.

Meanwhile, Neuhauser explains that stocks will remain volatile amid the trade-war uncertainty.

"The market hates uncertainty, so obviously anytime a president is discussing tariffs and global issues -- it's going to have some angst to it," he said. 

Stocks have had a strong run in June so far on hopes the Fed will act to counter a slowing global economy due to the escalating trade war with China. The benchmark S&P 500 index is up about 5% so far for the month.

Meanwhile, Neuhauser attributes Livermore’s success to “a natural instinct of curiosity and the ability to locate and grasp specific situations which are under-followed, under-appreciated, or just flat our mismanaged, especially given market volatility.”

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So what is his advice for average investors in today’s volatile environment? “Focus on the downside to every investment. Situations where there is limited downside and large optionality to the upside always work best. For Livermore, that's our focus and our history suggests we can manage unique situations and be contrarian,” he said.

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Economy
David Neuhauser, managing director at Livermore Partners, told Newsmax TV that the Federal Reserve “has been too reactionary” in its rate-setting strategy.
david neuhauser, fed, reactionary, hedge fund
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2019-35-13
Thursday, 13 June 2019 06:35 AM
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