There are many adjectives one can use to describe legendary investor Robert Arnott, but “bullish” is not one of them. Arnott, who is chairman of Research Affiliates and manager of several successful Pimco portfolios, was a Cassandra of the subprime crisis. He correctly predicted in early 2008 that the housing market along with consumer spending would crumble.
Now Arnott, 55, is bearish once again. He said in a telephone interview with Reuters that the global markets are in “the very early stages” of a sovereign debt crisis which could lead to another recession in the fourth quarter of 2010. “People should not worry about is not the Greeces and Hungarys of the world, but contagion to the Italys and Spains and, heaven forefend us, the United States,” Arnott says.
Arnott isn’t sure how long the recession will last. “I would not expect it to be as deep,” he predicts. “But if it’s even a modest recession from this starting point, it will feel deeper.”