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- Market sell-off after Fed’s Sunday rate cut is "totally understandable"’ - hedge fund investor
Market sell-off after Fed’s Sunday rate cut is "totally understandable"’ - hedge fund investor
CNBC reports that it's "totally understandable" why U.S. stock futures plunged after the Federal Reserve's latest moves to counter the economic hit from the coronavirus outbreak, said Anthony Scaramucci, a hedge fund investor who briefly served as President Donald Trump's White House communications chief.
"The reason why markets are selling off right now is we have a ton of information about the virus, but a very, very little amount of understanding," Scaramucci, founder and co-managing partner of Skybridge Capital, told CNBC.
"So, what's happening right now (is) we're starting to price in the reduction in earnings for 2020 and the possibility now of a recession," he added.
The Fed's moves on Sunday, which include slashing interest rates to zero, were aimed at countering some of the outbreak's impact on the U.S. economy.
Still, Scaramucci said there's more than a 90% chance that the U.S. economy could contract by between 4% and 6% in the second quarter this year. It's also "very, very likely" the same could happen in the third quarter, he added. "That's why you're seeing a flood out of stocks right now," he said.
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