Wall Street hedge fund veteran David Einhorn, founder and president of Greenlight Capital, anticipates that the Federal Reserve will implement more interest rate cuts this year than the market currently expects. This outlook has strengthened his confidence in his substantial gold investments.
Despite market expectations for rate reductions cooling on Wednesday following a stronger-than-anticipated U.S. jobs report for January, traders still assign an over 88% probability to the Fed enacting two 25-basis-point cuts by year-end, according to the CME FedWatch Tool.
Einhorn, however, believes the market is mistaken in interpreting the latest jobs data as a reason to avoid cutting rates. He contends that the number of cuts could be significantly higher. Einhorn expects that Kevin Warsh, nominated by former President Donald Trump to replace Jerome Powell as Fed Chair, will be able to persuade the Federal Open Market Committee (FOMC) to approve more aggressive easing.
In an interview with CNBC's "Money Movers" host Sara Eisen on Wednesday, Einhorn stated, "If inflation were at 4% or 5%, sure, he might not be able to convince others. But barring that, he will make the argument from a productivity perspective." Einhorn added that, in his view, Warsh would advocate for rate cuts "even if the economy is running hot."
Einhorn continued, "I think we will end up with far more than two rate cuts by the end of the year."
The hedge fund manager also holds a significant position in gold. Gold prices dipped late last month following Trump's announcement of Warsh's nomination, as the move alleviated Wall Street's concerns about the Fed's independence. The metal, often viewed as a hedge against inflation, has since recovered. Gold futures have surged more than 17% year-to-date. This follows a spike of over 60% in 2025, driven by heightened threats to Fed independence, escalating geopolitical tensions, and unstable trade policies. Since 2024, gold has accumulated gains exceeding 120%.
Einhorn pointed out that gold has been on a sustained upward trend in recent years because it is "becoming a reserve asset held by central banks globally." Einhorn rose to prominence in 2008 after shorting Lehman Brothers at the Sohn Investment Conference; the investment bank collapsed just months later.
He said, "U.S. trade policy is highly unstable, and this is prompting other countries to say they want to settle trade in something other than U.S. dollars."
Einhorn cited a long-term rationale for holding gold, stating that the current relationship between U.S. fiscal and monetary policy is "devoid of any logic." He also noted that monetary conditions in other major developed economies are "as bad as, or worse than, in the United States." Last month, the U.S. dollar recorded its largest single-day decline since April 2025 after Trump expressed a lack of concern over its recent weakness.
Einhorn remarked, "Over the next several years, issues with some major currencies could emerge and become apparent."
Einhorn described betting on additional rate cuts as "one of the best trades in the market right now." He also disclosed that he is long SOFR (Secured Overnight Financing Rate) futures, a position that essentially wagers on short-term interest rates continuing to decline.
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