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Billionaire investor Howard Marks said in a new investor letter that the idea that the Federal Reserve can continue to fuel the US economic recovery and stock market rally without interruption is “too good to be true”, especially “well. established” amid fears about rising inflation. on Tuesday.

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The cofounder of Oaktree Capital Management says that “it’s still Groundhog Day” for investors — market conditions have changed little from several months ago as stocks near record highs despite rising inflation concerns.

Marks said the US economic recovery that began in late 2020 is “still underway” and stocks have continued their meteoric rise since March 2020, but “there is still no consensus” whether high inflation is fleeting or prolonged. Will prove to last, Marx said.

Concerns about rising inflation are “so far well-founded,” although it is also unclear whether the current surge is due to the Federal Reserve’s monetary policy or ongoing supply chain and labor market constraints.

While the central bank’s job has historically been to control inflation and monitor economic growth, the Fed has in recent years taken on the “additional task of boosting markets by lowering interest rates and injecting massive amounts of liquidity into the economy.” But”, Marx described.

The billionaire investor was also critical of progressive Democrats who opposed the nomination of Jerome Powell for a second term as Fed chairman for his lack of action in addressing climate change.

“So now we have a Fed that is there to control inflation, spur growth and employment, support markets, and fight climate change – what a role an institution can play and still maintain a coherent effort.” can?” Marks asks.

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