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Soros and Zell Warn of Recession

Famed investors George Soros and Sam Zell warned of a recession recently.    Said George Soros in Sri Lanka:

China is struggling to find a new growth model and its currency devaluation is transferring problems to the rest of the world, Soros said in Colombo. A return to positive interest rates is a challenge for the developing world, he said, adding that the current environment has similarities to 2008.

“China has a major adjustment problem,” Soros said. “I would say it amounts to a crisis. When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008.”

Sam Zell, who has been dumping his commercial real estate holdings, believes a recession is possible next year.

Billionaire investor Sam Zell said the U.S. economy could go into a recession in the next year and that an expected Federal Reserve interest-rate increase is coming at least six months too late.

The central bank has been too cautious and the economy would already be adjusting if it raised rates six to nine months ago, giving Chair Janet Yellen “more room if a recession is on the way,” Zell said Wednesday in an interview on Bloomberg Television. Multinational companies are laying off workers, global trade is slowing and there’s a possibility China’s economy will falter, he said.

“There is a high probability that we are looking at a recession in the next 12 months,” Zell said on the “Bloomberg” program. “The strong dollar is having a tremendous impact on U.S. production and U.S. businesses.”

Soros and Zell have in the past benefited from a correction in asset prices, so their views could certainly be self-serving.   Nevertheless, more and more smart investors are warning of a shaky economy.  

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