“The Fed’s goal is to destroy the economy in order to save it,” says Research Affiliates’ founder and chairman Rob Arnott in an interview with Fox Business News, using the biggest weapon in their arsenal—monetary policy—in order to tamp down inflation as much as they can. However, the Fed is also responsible for the inflation in the first place, Arnott contends, and will wind up hurting the economy in their effort to rescue it.

While Arnott doesn’t believe the yield curve inversion predicts a recession, he does believe that it causes one. The yield level has swung from being too low—boosting “zombie companies”—to now being too high. The Fed should be paying much more attention to the long end of the yield curve and what it has to say about “the appropriate level of yields,” Arnott told FBN.

As for opportunities, Research Affiliates’ model shows relatively muted 10-year returns for U.S. large- and small-cap stocks, because the U.S. is the priciest stock market in the world. The P/E ratio for the U.S. market is a bit over 30 times earnings, which is notably high. Growth is priced at about 5 times the valuation multiples of value, a pricing that Arnott calls “extravagant.” Pricing is “distorted,” he believes, and while AI is certain to significantly disrupt the economy for years to come, it’s created its own bubble with those AI-focused stocks priced as if they are all going to be winners. However, U.S. value is “sensibly priced,” Arnott says, and overseas value—in Europe, Japan, and emerging markets—is “very attractively priced.” Meanwhile, inflation is beneficial for value stocks, so if the Fed isn’t able to tamp down inflation to their target within the coming months, value will be the place to be, Arnott tells FBN.