Tesla Bull Ross Gerber Says Market Already Pricing In Recession: 'When Does The Fed Blink?'

Ross Gerber, the co-founder of Gerber Kawasaki Wealth and Investment Management and a prominent Tesla Inc. TSLA bull, believes any change in the U.S. Federal Reserve’s monetary policy will lead to a stock rally.

What Happened: Gerber attributed his belief to the market already pricing in a recession and a 2% decline in earnings. "However, it is difficult to be bullish in current times because of the Fed’s actions," Gerber tweeted.

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“The bottom line is the U.S. economy is still quite strong and the best game in the world. China and Germany are in recession, and it’s crucial for the fed to manage for growth as it’s clear inflation is moderating. Albeit slowly,” he said.

Risking Mistake: Gerber said the Fed needs to pause and watch or risk making a mistake because there is a 6-12 months lag for the effects of policy to reflect on the economy. 

“Things should get interesting in November. Election. Softer numbers. Easier comps. When does the Fed blink. Cause if they mess up America. They will be solely to blame," Gerber tweeted.

Why It Matters: Market experts have been calling for restrained policy action given how the Fed’s aggressive policy has shaken stocks, bonds and commodities. 

The SPDR S&P 500 ETF Trust SPY has lost over 25% since the beginning of 2022 while the Vanguard Total Bond Market Index Fund ETF BND has shed over 16% in the same period.

Hawkishness Galore: The central bank seems undaunted in its task to rein in inflation. With just two weeks before its policy decision, Minneapolis Fed President Neel Kashkari reportedly said pausing the rate hike campaign would not make sense if inflation keeps heating up.

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