Robertson Calls Monetary Policy Like Japan’s ‘Dangerous’

Updated on

Julian Robertson, the billionaire founder of Tiger Management LLC, called global monetary policy, such as Japan’s surprise expanded stimulus today, dangerous as central banks push bond yields down and create a bubble.

“The monetary authorities all over the world are trying to cheapen their own currencies -- it’s a race everywhere and I’m not sure it’s the best thing to do,” Robertson said today in an interview on Bloomberg Television with Tom Keene, Scarlet Fu and Brendan Greeley. “We have a bubble developing because we have forced bonds to almost no yield and it’s really the thing that’s the most dangerous going on economically in the world.”

Bank of Japan Governor Haruhiko Kuroda led a divided board to expand what was already an unprecedentedly large monetary-stimulus program, boosting stocks and sending the yen tumbling. Kuroda and four of his eight fellow board members voted to raise the BOJ’s annual target for enlarging the monetary base to 80 trillion yen ($724 billion), up from 60 to 70 trillion yen, the central bank said. An increase was foreseen by just three of 32 analysts surveyed by Bloomberg News.

Robertson, 82, said last month at the Bloomberg Markets Most Influential Summit in New York that governments are buying bonds to “keep their countries moving along economically.” He said today that low bond yields are forcing investors who would otherwise be allocating to bonds to invest in stocks.

Stocks rose around the world today, with the Standard & Poor’s 500 Index surpassing a closing record, while the yen plunged to a six-year low.

Ponzi Scheme

In a separate radio interview, he gave a hypothetical example of a broker avoiding low-yielding debt.

“‘Oh, we can get bigger yields than that -- we’ll go to the real estate investment trusts,’” Robertson said. “And, of course, they are a legalized Ponzi scheme.”

The billionaire investor, who said he is “not that bullish,” pointed to some opportunities. He called shares of Apple Inc. “awfully cheap” and said that Alibaba Group Holding Ltd. will “play well outside of China” and can grow organically and by acquiring other companies.

Robertson started New York-based Tiger Management in 1980, and by mid-1998 assets had soared to about $22 billion on the back of annual returns averaging 32 percent. Losses and investor withdrawals over the following 18 months reduced Tiger’s assets to about $6 billion and in 2000, Robertson announced he would close the firm to outside investors. Since then he has transformed it into a business financing startup hedge-fund managers and he runs a charitable foundation.

Korean Opportunities

Run Ye, co-founder of Tiger Pacific Capital LP, one of the recipients of Robertson’s startup capital, said during the interview that his firm is finding opportunities in Korean retail companies that are leveraging the Chinese market and as consumers in Korea shift away from Japanese products.

Ye previously worked for Tiger Asia Management LLC, which shut down in 2012 amid a three-year insider trading investigation by Hong Kong regulators.

Robertson said Tiger’s top two performing managers this year trade in Asia and that the region is the “golden place for hedge funds.”

“‘This is a little bit like the way hedge funds were at first in the United States,’’ Robertson said. ‘‘Now there are so many hedge funds in the United States that in general all of them are very good. There’s so much competition.’’