The Federal Reserve's claims that the U.S. is not entering a recession are not reassuring, according to one widely followed market watcher who insists a downturn is already underway.
"If they raise rates, the dollar goes higher and it creates a problem for them. If they don't do anything then it's a sign that the economy is weak and that will lead asset prices to sell off," said Pal, publisher of The Global Macro Investor. "They are really boxed into a corner."
Pal is known for making bold predictions. In November 2014 he called the rally in the U.S. dollar index and more recently, he said that European banks were going to zero. He know thinks the U.S. is entering a recession. In addition, Pal has argued that rather than proceed with another hike, the Fed will have to resort to negative interest rates.
"I think the chances of negative rates in the U.S. are relatively high. The Fed has been talking to people about it, banks have to start thinking about how to prepare for it," added the founder of Real Vision TV.