Billionaire investor Carl Icahn warns of “danger ahead” for United States economy

Icahn defended Trump, saying he is a “very open-minded guy” who listens to input. But his concerns are well known, and not as dire as the market feared yesterday. Icahn owned an 8.8 percent stake in the company as of September 22, according to an SEC filing. Judging by the attention his video has received on CNBC and other business news outlets, those qualifications are enough for a few.

Asked if he would increase his position in Apple, Icahn remarked, “We’re considering buying a lot more”. And his solutions will do little to help ordinary Americans.

He said his warning is directed at companies that are borrowing more than they should to afford the stock repurchases.

Icahn, a Wall Street veteran who made his fortune buying stakes in companies such as RJR Nabisco, Texaco, Phillips Petroleum, Lions Gate Entertainment Corp, Netflix Inc, Apple and eBay Inc and pushing their management to change their strategy, said that he is hedged against the possibility of a market meltdown. He also said the Federal Reserve is overdue in beginning to raise interest rates.

“In so much as we’re anxious about financial stability, a weaker economy and disinflationary pressures are going to make it worse”, said Mike Konczal, a financial policy expert at the left-leaning Roosevelt Institute.

Raising interest rates is a “terrible” way to address financial bubbles because of that unintentional fallout, Konczal added. But it does signal that the premium investors are paying for earnings might be higher than thought. The trend away from investment and toward shareholder compensation began long before the recent low interest rates.

Stock buybacks drive up the value of the stock by limiting its supply. “The average age of corporate property, plants and equipment is an astounding 22.3 years, the oldest it has reached since 1941”, Icahn said.

Greater worker input would likely lead to higher wages, which would drive companies to boost productivity – whose lackluster growth Icahn laments. “The exit door is fine when things are OK but when they yell fire, they can’t get through the exit door … and there’s nobody to buy those junk bonds”. Other economists have called for corporate taxes to be lowered more permanently. A 2011 report by Senate Democrats looked at the impact of a similar one-time tax holiday in 2004. He said the merger boom is contributing to false growth by companies. Even if they have to borrow the cash, you know you have the cash in Europe or somewhere.