Julian Robertson: "There's A Bubble" And "It's The Federal Reserve's Fault"

Tyler Durden's picture

Call it the "bearish billionaire" curse. One month ago, MarketWatch penned "7 billionaires who are worried about a stock-market correction" which listed Carl Icahn, David Tepper, Howard Marks, George Soros, Jeff Gundlach, Warren Buffett and Eliot Singer as some of the world's wealthiest people who are losing sleep over the S&P trading at all time highs.

Today we can add another investing billionaire - one of the original hedgers, Tiger Management co-founder Julian Robertson - who spoke to CNBC's Kelly Evans, and stated in no uncertain words that the market is a bubble and that "it's the Federal Reserve's fault, and the Federal Reserves all over the world."

KELLY EVANS: ... I just wonder what you think generally of where we are in the equity market today, where we are in the stock market in terms of valuation.

 

JULIAN ROBERTSON: Well, we're very, very high -- have very high valuations in most stocks. The market, as a whole, is quite high on a historic basis. And I think that's due to the fact that interest rates are so low that there's no real competition for the money other than art and real estate. And so I think that's why the valuations are so high. I think when rates do start to go up and the bonds become more attractive to investors, it will affect the margins.

 

KELLY EVANS: Do you think they're dangerously high right now?

 

JULIAN ROBERTSON: Well, that's a -- you know, it's pretty -- they're high.

 

KELLY EVANS: Is it the Federal Reserve's fault or...

 

JULIAN ROBERTSON: Yes. It's the Federal Reserve's fault, and the Federal Reserves all over the world. I mean, in Germany, in order to buy a bond, until recently, you actually had to pay interest. And, you know, that's certainly going to discourage a lot of people from doing so. You know, you could get a fairly good dividend in Nestle, but if you wanted to buy a Nestle bond, you had to pay a fairly heavy penalty.

 

KELLY EVANS: Doesn't seem to make a lot of sense.

 

JULIAN ROBERTSON: It doesn't.

 

KELLY EVANS: That said, this morning, the Treasury Secretary Steve Mnuchin, who was here, said that he thought that Chair Janet Yellen is, in his words, "obviously quite talented," when asked about her potential to lead the Fed for another term.  Do you disagree with him?

 

JULIAN ROBERTSON: I think she's going to probably be asked to stay on for a while. But I think because there's been collusion all over the world, let's get interest rates down. And it's not just the United States, it's all over the world... I think we need interest rates to appreciate, to go up, and to be . . . Because I think we are creating a bubble.

 

KELLY EVANS: A bubble in the market? 

 

JULIAN ROBERTSON: Yes.

 

KELLY EVANS: In the stock market?

 

JULIAN ROBERTSON: Yes, ma'am.

Tiger Management's Julian Robertson: Market is very high on a historic basis from CNBC.

And yet, despite what he himself admits is a central bank-created "market bubble", Robertson is unable to stay away from his beloved tech names, as he admitted in the same interview:

KELLY EVANS: All right. Let me ask you about a couple of particular companies, just thinking about Apple, for example, which has a lot of cash overseas.  You were a holder of that going back a couple of years, and they have a big event today and are launching a bunch of new products. But has it just become too expensive for you guys, is it not -- or would you look at investing in Apple again?

 

JULIAN ROBERTSON: No, I think we should definitely look at Apple. Apple is not that expensive of a stock. There are a lot of disadvantages of being an old goat. One of the few advantages is the fact that we've seen all this a little bit before. And right now the Apples, the Facebooks, the Googles, those great growth companies are priced cheaper than they would have ever been in the '60 s , '70 s , and '80 s. And I don't think a lot of people realize that.

 

KELLY EVANS: Well, you're trimming your positions in Facebook, and Google, and you're not in Apple right now.

 

JULIAN ROBERTSON: Well, I don't think I've . . . I kind of trade Facebook and those things a little bit. And I consider myself kind of a long-term player of Facebook.

 

KELLY EVANS: Even though you think the markets overall are expensive, these emblematic tech same names you actually don't think are that expensive?

 

JULIAN ROBERTSON: Correct.

To summarize: central banks have blown a bubble, it will burst, so buy FANGs.

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Clockwork Orange's picture

Personally accountable, Chairman Yellen

Escrava Isaura's picture

Julian Robertson: "There's A Bubble" And "It's The Federal Reserve's Fault"

Wow. So predictable.

Look,  look, there’s a bubble. Look.

What this idiot forgot to tell you is: If wasn’t for this bubble, unemployment wouldn’t be 20 percent but, more likely, 95 percent.

How am I so sure?

Wait post-collapse and see if any of you will find a job. The doctors will be working for the crust and crumb because there won’t be no more bread.

You can hold me for this statement post collapse.

 

BLOTTO's picture

Where is the mentioning of the severely decaying human spirit bubble on this planet you fucking cunts?! Fuck me in the fuck.
.
Crickets chirping.

Escrava Isaura's picture

severely decaying human spirit bubble

What is that suppose to mean?

If you’re saying that the western culture is in decay, I agree with you 100 percent.

However, the bubble has nothing to do with the society decay. The bubble has to do with that there’s no more growth.

Give you an example: Saudi Arabia.

It has to come up with financial engineering as well —$1 trillion dollars IPO covered here at Zero Hedge —because it can’t raise the price of oil without crashing the world economies, meaning, US and Europe economies.

 

hxc's picture

Looks like the socialist kook found his way back into mommy's basement.

Saudi Arabia can't raise oil prices because NOBODY ELSE IS SELLING HIGHER EITHER

Come on dude. Micro 101

Silvery Dan's picture

Stay away from balconies and nail guns.

Dickguzinya's picture

Boy Julian, if I hadn't of read this article, with your profound words of wisdom, I never would have guessed the Federal Reserve Banks are responsible for the bubble.  You win the Massengale of the day award, as well as the captain obvious award.  Now stick them both in your ear.

Jackagain's picture

Bubbles are always the Federal Reserve's fault...

Vlad the Inhaler's picture

Like the South Sea bubble of 1711?

OCnStiggs's picture

More reasons to liquidate the Fed.

Batman11's picture

How much real wealth did those Tulip Bulbs contain in 1600s Holland?

Nothing’s changed.

Wealth – real and imaginary.

Central Banks and the wealth effect.

Real wealth comes from the real economy where real products and services are traded.

This involves hard work which is something the financial sector is not interested in.

The financial sector is interested in imaginary wealth – the wealth effect. Hardly any of their lending goes into productive lending into the real economy.

They look for some existing asset they can inflate the price of, like the national housing stock. They then pour money into this asset to create imaginary wealth, the bubble bursts and all the imaginary wealth disappears.

1929 – US (margin lending into US stocks)

1989 – Japan, UK, Canada, Scandinavia (real estate)

1999 – US (dot.com)

2008 – US (real estate bubble leveraged up with derivatives for global contagion)

2010 – Ireland (real estate)

2012 – Spain (real estate)

2015 – China (margin lending into Chinese stocks)

Central Banks have now got in on the act with QE and have gone for an “inflate all financial asset prices” strategy to generate a wealth effect (imaginary wealth). The bubble bursts and all the imaginary wealth disappears.

The wealth effect – it’s like real wealth but it’s only temporary.

All that QE has to go somewhere and it sure as hell isn't in the real economy as can be seen from the inflation figures.

Refer to fundamentals to distinguish between real and imaginary wealth in markets. It's what they are for.

“Stocks have reached what looks like a permanently high plateau.” Irving Fisher 1929.

Did you check the fundamentals?

Most of that wealth is imaginary.

Iskiab's picture

Best comment ever! This is why there are bubbles and crashes, too much excess cash that needs to be rid of to push investments back to productive assets.

illuminatus's picture

Golly Gee, the guy finally figured it out after a gazillion years. He looks it too. And buy FANGS??  Amazing. This guy and people like him actually get paid for their bullshit.

Musum's picture

This old man contradicted himself. He may be just as confused as the Federal Reserves all over the world.

buzzsaw99's picture

i pooped my pants.  [/ike]

khnum's picture

To the moon Alice!..what part of infinity doesn't he understand

Rebelrebel7's picture

Not Donald Trump's fault?! He didn't read the memo.

Chippewa Partners's picture

Had a great track record.   I wish him well........

khakuda's picture

Fed can't stop themselves anymore.  Yellen was lamenting about high prices and wealth inequality before the markets went up another 40 - 50%.  They have created a monster like they did in the late 90s.  And we know how well that ended.

But they like to create bubbles because they gain more control over the markets and economy when they pop and they step in and take over.  Pure Ayn Rand stuff.

Dutch1206's picture

I think we're a little ways past "creating" a bubble

pizdowitz's picture

No all synapses firing anymore, Mr Robertson?

adolphz's picture

Can't make a point on here without a bunch of people being stupid. SHEP wave nailed the past two gap up opens in stocks. Keep preaching doom

spekulatn's picture

BTFJRH!!(BuyTheJulianRobertsonHigh)

Bitchez.

That is all.

pynky01's picture

Remember yall ... this is all a crap game...somebody roll the dice.

Zorba's idea's picture

END THE FED. END THE FED NOW. END THE FED RIGHT FUCKING NOW!!!  To all concerned fellow citizens, "Primary" your CONgressman/Senator. Pick your OWN candidate...one who is committed to restoring our Constituion, our Liberties, our Prosperity for all ordinary citizens...Not the just the Corporate Citizens the Supreme court created out of mortar and balance sheets.

GodHelpAmerica's picture

I do respect the fact that he said "collusion", rather than "collaboration".

You can tell he sees these central bank actions as nefarious, and is reluctant to hide it.

JailBanksters's picture

It's a lot simpler and complicated than that.

The CLub FED can't NOT create FRAUD without the help of the usual Banking Suspects on Wall St.

And the Wall St Banks can't create FRAUD without the help of Club FED.

It's a symbiotic relationship, you can't blame one without blaming the other.

And the CLUB FED is made up of all members of Wall St Banks !!