Hedge-fund billionaire and Mets owner Steve Cohen says stocks will rebound after 'fake scare' recession

By Joseph Adinolfi

Finally, there's at least one hedge-fund billionaire on Wall Street who's relatively optimistic about the outlook for the U.S. economy.

Steve Cohen, the billionaire founder of Point72 Asset Management and owner of the New York Mets, reportedly told attendees at the Robin Hood Investors Conference on Wednesday that he expects the U.S. economy will see strong growth in 2024 after falling into a mild and short-lived "fake scare" recession later this year.

See: Why Bill Gross expects a U.S. recession to begin by year's end

Cohen isn't the first Wall Street luminary to warn about an imminent recession. Pacific Investment Management Co. co-founder Bill Gross said a sharp downturn could begin before year's end.

But while Gross expects the recession to be bad enough to pressure the Federal Reserve to consider cutting interest rates, Cohen anticipates that the economy would quickly bounce back, ultimately forcing the central bank to push borrowing costs "higher than people think" while helping stocks to rally between 3% and 5%, according to a report from Bloomberg News.

On the subject of artificial intelligence, a hot topic in markets this year, Cohen said he expects his firm will manage to harness the technology in a way that helps them create value.

Some of Cohen's hedge-fund competitors have recently warned about the deteriorating outlook for the U.S. economy. Pershing Square Asset Management's Bill Ackman said earlier this month that the economy is slowing faster than the data suggest.

See: Bill Ackman cashes out bet against Treasury bonds as yields hit 16-year highs

Paul Tudor Jones, the hedge-fund manager famous for profiting off the 1987 "Black Monday" crash, said he expects a double-digit selloff in stocks ahead of a coming recession.

See: Stock market likely to see 12% retreat ahead of recession, says trader who called '87 crash

Commerce Department data released earlier this week showed U.S. GDP expanded at an annualized pace of 4.9% during the third quarter, surpassing expectations from economists polled by The Wall Street Journal.

But others have pointed to concerning signs that have cropped up in other data, as well as in corporate earnings reports and the Fed's "Beige Book" collection of anecdotal attestations from business owners.

See: Wall Street is again worried about an imminent recession. Here's what the data show, and what it might mean for your portfolio.

-Joseph Adinolfi

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10-27-23 1344ET

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