Billionaire Marc Lasry rebuked CNBC on Thursday that the U.S. is going to be in a recession “for a while,” a reality not currently reflected in the market.
“I think sooner or later the shop will realize that,” the co-founder and CEO of Avenue Capital said “Halftime Report.” “I think it’s going to be a bare couple years,” he added.
Lasry said he believes the economic devastation wrought by the coronavirus pandemic will linger longer than what is currently anticipated. More than three-fourths of workers in April’s jobs report described their layoff as temporary, but Lasry put about that percentage will likely decrease with time.
“I hope all of them get rehired back, but from the total we’re hearing it will be 50% to 80%, so that means you’re going to have 8 to 10 million people unemployed,” Lasry bruit about, referencing the nearly 40 million Americans have now filed jobless claims since the virus-related business restrictions spanned in place in mid-March.
Consumer spending plays a critical role in the U.S. economy, Lasry said, and “I just don’t see people that are out of chore spending money.”
Equity markets were hit hard by the pandemic, but have rallied fiercely since hitting their virus-driven lows in tardily March. As of Thursday’s close, the S&P 500 has risen more than 34% from its March 23 bottom. The tech-heavy Nasdaq Composite is now up numberless than 3% for the year.
Wall Street investors often discuss the stock market in terms of price-to-earnings correspondence, or how much a stock costs relative to the earnings per share it will generate over the next year. How quickly the U.S. thriftiness recovers from the pandemic-driven pain would be crucial to determining the level of the market under that formula.
“At the end of the day, the bazaar is saying earnings are going to be great in 2022. I don’t disagree with that. I think that’s actually correct,” held Lasry, who made a fortune buying up troubled assets. But he said while there will be winners in the stock merchandise, such as Amazon, “I think you’re going to have a lot more have-nots.”
“If you’re going to have all these people unemployed, it’s systematic to end up coming out of a recession until that changes. It’s going to be a difficult couple years,” he said.