Mike Novogratz pounded the recession alarm, warned stocks would plunge further, and predicted some benefits from the crypto crash this week. Here are the 12 best quotes.
- Mike Novogratz predicted the US economy would rapidly slump into a deep recession.
- Tha Galaxy Digital CEO warned asset prices might not recover until the Fed reins in inflation.
Mike Novogratz predicted the US economy would quickly fall into a brutal recession, warned stocks could tumble another 20%, and cautioned asset prices might not rebound until the Federal Reserve gets inflation under control.
The veteran investor and Galaxy Digital CEO also suggested the crypto crash would help remove excessive leverage, reckless speculation, and aggressive tribalism from the fledgling industry. He made the comments in interviews with CNBC and Bloomberg and during a Morgan Stanley conference this week.
Here are Novogratz's 12 best quotes, lightly edited for length and clarity:
1. "It's hard to not underestimate the huge impact that the response to COVID-19 had on all assets. We pumped so much liquidity into the markets it was crazy, we had never seen anything like it. We were throwing trillions of dollars around like matchsticks."
2. "We don't have 12-year bull markets that end with a 4-month bear market. It's not the way it works."
3. "The only way you kill inflation at this level is to put the economy in a deep recession."
4. "A soft landing is impossible. The economy is going to go into a recession fast. You're going to see the economy just screech to a halt. That's what the Fed needs to do to get inflation down."
5. "As long as the market believes the Fed is behind the curve and is going to catch up, I think you're going to see asset prices under pressure."
6. "I don't think we've seen the bottom of the stock market yet. Stocks could fall another 15%, 20%. I think you're much closer to the bottom in crypto; ethereum should hold around $1,200, and bitcoin around $20,000 or $21,000."
7. "We're going through what feels a little bit like a Long-Term Capital Management moment in crypto." (Novogratz was referring to a highly leveraged hedge fund that blew up in the late 1990s.)
8. "When you have really big players that have borrowed money from all over the place, it creates a daisy-chain effect. That is burning through the system right now. My sense is it's mostly burned out, but these fires go until they run out of oxygen. You would have to be one heck of a diamond-handed player to sustain all of this if you have too much leverage. My guess is leverage has been knocked out of the system."
9. "A lot of confidence got kicked out of the market. It's going to take a while for Humpty Dumpty to get put back together again."
10. "During the COVID bubble, Robinhood and lots of others spread this idea that everybody should be an investor. Well, a lot of people don't have the training to be investors, they don't understand risk management. You saw a lot of froth, and that's mostly been taken out of the market now."
11. "In crypto, it's tribal as heck. I literally get death threats when I badmouth another ecosystem. There's almost an irrationality in how people invested — not just in crypto, around the planet. That's going to get washed out. Not completely, these communities are resilient, but I think it's going to be a lot less important." (Novogratz pointed to GameStop and AMC's retail fanbases as examples of "identity investing.")
12. "Bitcoin will lead the markets back out of this Fed tightening. The moment the Fed flinches, the moment Powell pauses because the economy's really starting to roll over, you're going to see bitcoin explode north."
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