Robert Rodriguez Remains Liquid and Cautious

By on August 20, 2011

Robert Rodriguez, First Pacific Advisors, was interviewed on CNBC.  Rodriguez is a three-time top money manager with a much better than average long-term track record.

Rodriguez remains cautious with 35-40% of his managed portfolios in liquid assets [cash].  Rodriguez added that a 10-year Treasury yield below 2% would imply increased volatility to the downside.  When asked why, Rodriguez stated it would be indicating far more recessionary elements.  David Faber asked whether Rodriguez actually thought there would be a recession.

Rodriguez was of the opinion the risk of recession was 50% and rising.  He said a credit crisis was emanating from the Federal and sovereign level as opposed to the corporate level, as it was in 2008.  However, he indicated there was still time to avert a crisis by getting the fiscal house in order.  Rodriguez said the government and Congress were still delusional [regarding the budget debate and agreement].

Rodriguez said the money multiplier was collapsing along with the Fed multiplier and lending wasn’t occurring.

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