①David Einhorn, founder of Greenlight Capital, expects the Federal Reserve to cut interest rates more times than the anticipated two this year, as he believes Kevin Warsh, Trump's nominee for Fed Chair, will be able to persuade the committee to make significant rate cuts; ②Einhorn is bullish on gold, arguing that it has become a reserve asset for central banks, and that unstable U.S. trade policy is prompting other countries to seek trade settlement in currencies other than the dollar, driving up gold prices.
Cailian Press, February 12 (Editor Huang Junzhi) Despite January’s nonfarm payroll data significantly surpassing market expectations, David Einhorn, the founder and president of Greenlight Capital, a prominent Wall Street hedge fund, predicts that the Federal Reserve will cut interest rates far more times than the expected two this year, strengthening his confidence in his gold investments.
On Wednesday Eastern Time, data released by the U.S. Bureau of Labor Statistics showed that in Januarynonfarm payrollsthe figure reached 130,000 people, significantly better than market expectations, somewhat alleviating concerns about a slowdown in the labor market and weakening rate cut expectations. According to the CME FedWatch Tool, traders currently expect the central bank to cut rates twice in June and September respectively.
However, Einhorn stated that the market’s view of the latest employment data as a reason not to cut rates was “wrong.” In fact, he believes that the magnitude of rate cuts could be larger because he expects Kevin Warsh, Trump's nominee for Fed Chair, to convince the committee to make substantial rate cuts.
He said during a recent interview on Wednesday, “If inflation reaches 4% or 5%, he certainly won’t be able to persuade people. But given the current situation, I believe Warsh will argue based on productivity. And even if the 'economy overheats,' he will take a stance of lowering interest rates.”
Warsh has consistently argued that artificial intelligence will significantly boost productivity, allowing borrowing costs to be reduced without triggering inflation.
“I believe by the end of the year, the number of rate cuts will definitely far exceed twice,” continued Einhorn.
Einhorn believes betting on further interest rate cuts is “one of the best trades at the moment,” adding that he holds long positions in SOFR (Secured Overnight Financing Rate) futures, which essentially amounts to betting that short-term interest rates will continue to decline.
Gold
This hedge fund tycoon, who gained prominence during the financial crisis for 'bringing down' Lehman Brothers, is particularly bullish on gold. At the end of last month, after Trump nominated the 'most hawkish' Kevin Warsh as the Federal Reserve chairman, gold was sold off as Trump's nomination eased Wall Street's concerns about the independence of the Fed.
Since then, gold (commonly regarded as an inflation hedge) has rebounded. The price of gold futures has risen by more than 17% so far this year. Previously, due to threats to central bank independence, escalating geopolitical tensions, and unstable trade policies, the price of gold surged by over 60% in 2025. Since 2024, the price of gold has increased by more than 120%.
Einhorn stated that gold has 'become a reserve asset held by central banks worldwide,' which is why its price has risen significantly in recent years.
He further explained, 'The trade policy of the United States is highly unstable, prompting other countries to say that we want to settle trade in currencies other than the US dollar.'
Einhorn pointed out that the long-term rationale for holding gold lies in the fact that the relationship between our current fiscal and monetary policies is 'completely irrational.' He also noted that other major developed currencies are 'as bad as, or even worse than, the US dollar.'
'In the coming years, some major currencies may face certain issues,' he said.
