Richard Perry spoke at CNBC’s Delivering Alpha conference today and was dubbed as the ‘most powerful hedge fund investor’ by the news channel. He discussed the eurozone crisis and how opportunities may arise in that area as well as the strategy that the US government should apply to fix the housing market. Richard Perry’s take on eurozone is slightly different from that of Bruce Richards (Chief Executive Officer of Marathon Asset Management) and Ben Bernanke (Chairman Federal Reserve).
On Opportunities in Europe
On his assessment of Europe, Perry said that people with no experience of how European market works only see that the promises made on Greece were not delivered and expect the same to happen with the present rescue measures that EU is taking. He believes that times have changed and European countries have learned a lesson. Perry said that having new people at European Central Bank and in Italian and French governments have set the odds in favor of the Euro economy. He expects the EU to stick with each other and their currency. The new rescue measures for the euro crisis should be given some time to take effect as they were only set in motion in December of last year.
On the rising interest rates, Richard Perry said that the European market is still unsure whether ECB can be counted on as a fallback option. The European markets are willing to pay higher interest rates coupled with risk-free assets but they do not look favorably at any lower or higher interest values that comes with shaky investments.
Perry agreed with Bernanke’s view that the circumstances may get worse in Europe before they get better. He also said that Angela Merkel, Chancellor of Germany is the most important player in Europe, for now. He also emphasized that other European nations should ‘operate like Germans’ if they want to survive through the next five years. On a side not, in a recent interview reported by AFP, Merkel admitted that although she fully backs the support project for Spain , she is not sure whether it will return the required results.
“We have of course not yet organised the European project in such a way that we can be sure it will work, work well. That means we need to keep working on this. We have much to do, but I am optimistic that we will succeed,” she said.
These comments have come hours before the German Parliament is set to pass a $122 billion rescue plan for aid of Spanish banks.
On US Housing Market
While giving his opinion on US housing market, Richard Perry said that the government has to understand the link between people buying houses and its effects on economy. He elaborated his point of view by adding that the mortagage market should be reopened and mortgage corporations like Freddie Mac (OTC BB:FMCC) and Fannie Mae (OTC BB:FNMA) should be put on stable grounds again. By reopening the mortgage market, there will be more jobs available and the economy will revive again. He also said that these government sponsored enterprises are unfairly blamed for the whole housing debacle, as they took high risks and collected a very small percentage of profits “in order to create an opportunity for the American taxpayer homeowner, to create that American dream.”
Richard Perry is the CEO of Perry Capital. He is a hedge fund manager who has invested in several companies and since 2012 owns controlling interest in Barneys New York.