Third Point sees ‘mild recession’ for U.S. economy

In its Q2 letter to investors dated July 31, Daniel Loeb’s Third Point said it sees continued favorable economic conditions driven by declining inflation, which should eventually lead to less hawkish monetary policy. The fund also sees potential for the Federal Reserve to begin an easing cycle around the time American consumers “begin to run low on cash, which should make for a mild recession.” Since consumers and businesses would be going into any economic slowdown with healthy balance sheets, the risk of a credit dislocation is minimal in the coming year, also reducing the risk of a severe recession, Third Point wrote.