Novogratz sees end to decade-long stock rally based on 'dangerous' macro environment
- Former Fortress hedge fund manager Michael Novogratz predicts that the historic rally for stocks is coming to an end.
- “This could be the last leg of this giant decade long liquidity driven rally," says Michael Novogratz. "When you really step back, the macro is dangerous.”
- Novogratz says we're in a "strange paradigm for investing in general" thanks to central bank monetary policy and negative bond yields abroad, among other factors.
Hedge fund manager turned cryptocurrency investor Michael Novogratz cautioned that the stock market is nearing the end of its historic rally.
Based on the broader global environment, the former Fortress fund manager said he's skeptical of the risk-reward payoff for stocks.
"I think we're long in the cycle," Novogratz, head of cryptocurrency merchant bank Galaxy Digital, told CNBC's "Squawk Box" Thursday. "This could be the last leg of this giant, decade-long liquidity driven rally. When you really step back, the macro is dangerous and you're going to surf this last leg of the rally."
Novogratz pointed to Hedge fund kingpin Ray Dalio's recent LinkedIn post that made a case for gold and described a "paradigm shift" in markets. The Bridegewater Associates leader said the value of money is "being depreciated and domestic and international conflicts are significant, such as gold."
Much of that "paradigm shift" has to do with monetary policy, he said. The Federal Reserve cut its benchmark interest rate by a quarter point on Wednesday, following a three-year cycle of raising rates from the near-zero levels implemented during the financial crisis.
"We're in a strange paradigm for investing in general," Novogratz, who is also a former Goldman Sachs macro trader, said. "It's why lots of guys are buying gold, a lot of guys are skeptical of the equity market."
Novogratz also highlighted negative bond yields in Europe, the flattening yield curve and risk premiums coming off as a bid for buying gold. Novogratz was an early bitcoin investor and has argued that it has similar safe-haven investment qualities. He also started a cryptocurrency-focused merchant bank Galaxy Digital, which went public on a Canadian stock exchange last year.
"Bitcoin is not going to be a payment currency — it's going to be just like gold," Michael Novogratz told CNBC in May. "It won that lane."