Tags: Singer | Fed | economic | recovery

Singer: Thank Fed for 'Unfair, Distorted' Economic Recovery

By    |   Thursday, 11 December 2014 08:00 PM

Hedge fund star Paul Singer, founder of Elliott Management, isn't impressed with the Federal Reserve's six-year easing program.

The monetary stimulus may have helped spark an economic recovery, but it's an "unfair recovery, a distorted recovery," he said at a New York conference Thursday, CNBC reports.

The Fed's accommodation, which has included a record low federal funds rate target since December 2008 and a balance sheet that now totals $4.5 trillion, has artificially lifted financial markets, Singer said. And gains in those markets disproportionately benefit the wealthy.

Major stock indices hit record highs as recently as last Friday, and the Barclays 10- to 20-year Treasury bond index has returned a whopping 14.1 percent so far this year.

U.S. and European government bonds "provide horrendous value," Singer said, because they don't reflect inflation risk and the fact that central banks have been the major buyer for years.

The 10-year Treasury note yielded 2.18 percent Thursday afternoon.

Bonds are "very overpriced for the risk-reward," he said.

Another hedge-fund luminary Doug Kass, president of Seabreeze Partners Management, isn't so hot on Fed policy either. "The Fed has made a mockery of fundamentals," he writes on TheStreet.com.

"Never before have investors (and global economies) been so dependent on extreme policy and have comfortably embraced their confidence in the Fed's ability to successfully extricate from that policy without any unwarranted and adverse consequences."

That dependency and comfort aren't good for financial markets, Kass says. "There is limited honest price discovery as the price of many asset prices has been distorted."

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Hedge fund star Paul Singer, founder of Elliott Management, isn't impressed with the Federal Reserve's six-year easing program.
Singer, Fed, economic, recovery
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2014-00-11
Thursday, 11 December 2014 08:00 PM
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