|

Hedge Fund Industry Believes the Fed’s Quantitative Easing Has Bolstered U.S. Economy for Another 5 Years

ByBritt Tunick

June, 2015 – After three rounds of quantitative easing by the Federal Reserve, the majority of The New York Hedge Fund Roundtable’s members believe the U.S. economy’s rebound is solid. But when it comes to those who think that the rebound has been artificially inflated and will ultimately prove unsustainable, expectations are that the economy will collapse within the next 5 years.

The stability of the economy was the focus of the Roundtable’s June event, where Robert Wiedemer, co-author of “Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown,” discussed his book and his belief that it is only a matter of time until the U.S. economy collapses. Wiedemer outlined why he believes that the economy has been pumped up by a series of government-backed bubbles –from its borrowing of debt, to its intervention in the housing market and its overly-aggressive printing of money– and how the current bubble’s inevitable explosion is inevitable.

“The strength of the economy is at the forefront of any investment decision made within the hedge fund industry,” said Timothy P. Selby, President of the New York Hedge Fund Roundtable. “Robert makes a compelling argument for why hedge fund managers –and investors in general, need to be prepared for the unavoidable bursting of the current bubble the economy is within.”

As part of the event, the Roundtable conducted its latest monthly survey on the strength of the economy.

 

Following are some of the key findings of that survey:

  • When asked whether the U.S. economy has experienced a true rebound, 56% of members indicated that they believe the QE efforts initially boosted the recovery, but that the improvement is solid; 35% said they think the economy’s improvement is based entirely on the QE efforts; and 9% think the economy has experienced a true recovery.
  • When asked how long the U.S. economy will remain strong if it truly has been boosted by the Fed’s QE efforts, 60% of member said they expect the economy to decline within five years; 30% expect a decline within one year and 10% expect it will be another 10 years before the economy turns downward.
  • 76% of members responding to the poll think the Fed would undertake a fourth round of quantitative easing if the market were to drop by 20% or more, while 24% believe the Fed would not get involved again.
  • When asked whether the U.S. has an effective credit limit, or whether the government has the ability to borrow an indefinite amount of money, 50% of respondents said they don’t think there is a limit to how much the government can borrow; 30% think we are nearing the U.S. credit limit and 20% believe we passed the U.S. credit limit long ago.
  • If the U.S. economy is currently within a bubble created by the government’s massive borrowing and QE efforts, 33% of respondents believe the best investment opportunities at the moment lie in shorting stocks; 22% think real estate is best; 17% think it is gold; 14% picked bonds; 5.5% said futures; another 5.5% said energy and 3% think it is commodities.
  • If the bubble doesn’t burst, 32.5% of respondents think long-term investment in stocks offers the best opportunities; 27.5% think it is real estate; 22.5% picked gold; 12.5% said bonds; 2.5% chose commodities and 2.5% think it is energy.

June’s “bonus” question: When asked who they believe will win the democratic nomination, an overwhelming 91% believe it will be Hillary Clinton; 7% think it will be Martin O’Malley and 2% think it will be Bernie Sanders. Similarly, when asked who will land the republican nomination, 64% of respondents think it will be Jeb Bush; 7% think it will be Ted Cruz; another 7% think it will be Rand Paul; another 7% think it will be Scott Walker; 5% think it will be Donald Trump; another 5% chose Mark Rubio and yet another 5% chose John Kasich.

 

About The New York Hedge Fund Roundtable:

The New York Hedge Fund Roundtable is a non-profit organization focused on promoting ethics and best practices within the alternative investment industry. The membership consists of investors, fund managers and other industry professionals who regularly meet to discuss current issues within the industry and connect with peers. Monthly events center around thought-provoking speakers and panels designed to keep members apprised of timely and important issues within the alternative investment industry. The Roundtable’s goal is to provide a forum for thought leadership, where industry professional have the opportunity to enhance their knowledge and skills and to network with other individuals committed to advancing the industry with the highest ethical standards. For additional information about the Roundtable, visit: http://www.nyhfr.org