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Kevin O’Leary Says It Might Be Time To Buy More Stocks


Billionaire investor Kevin O’Leary says volatility is back and it could be a good time to buy more shares.

The president of O’Shares Investments told CNBC’s “Street Signs Asia” on Wednesday: “It’s disappointing for the stock market to lose nearly 1,000 points in 40 minutes. That means volatility. returned”.

“If you’re an investor, maybe the best thing to do here is – because you can’t predict the bottom – is to take a chance on days like today and buy stocks that you think are attractive. “

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His comment came hours after US consumer price index report showed that August inflation was hotter than expected, despite a drop in gasoline prices. Stocks fell across the board and Dow falls 1,200 points in worst day since June 2020as investors braced for more rate hikes from the US Federal Reserve to help cushion price increases.

“Just 48 hours ago, it was assumed that the Fed’s final rate would be 4%. And that would be the maximum in terms of rate hikes, but now we’re past that,” O’Leary said. “, said O’Leary, referring to the final interest rate, or the level at which the US central bank is expected to stop raising interest rates.

The degree of uncertainty about interest rates at the end of the period, where the Fed will stop raising, is now officially a mystery. And that’s an extremely difficult problem for the market.

Kevin O’Leary

President, O’Shares Investments

“There’s a bet going on in the market, you can take that as volatility. In fact, it could be significantly higher than 4%,” he said, predicting the Fed would likely increase. at least 75 basis points, most likely a full percentage. the point. He’s not alone in that prediction, Nomura is also expecting the central bank to raise interest rates up 100 basis points next week.

“The degree of uncertainty about interest rates at the end of the period, where the Fed will stop raising, is now officially a mystery,” said the venture capitalist.

Inflation rose more than expected in August as rising food and accommodation costs offset falling gas prices, the Bureau of Labor Statistics said on Tuesday.

CPI, which tracks a broad basket of goods and services, rose 0.1% on the month and 8.3% from a year ago. Excluding volatile food and energy costs, August CPI rose 0.6 percent month-on-month and 6.3 percent year-on-year.

The economy is still strong

O’Leary said much of the economy is still going strong and the Fed will continue to raise rates until it sees “some kind of decline”.

“The consumer economy, which accounts for 65% of the economy, remains strong. Employment remains high,” he said. “And what we need to see is a slowdown.”

The food index rose 0.8 percent in August and accommodation costs, which account for about a third of the consumer price index, rose 0.7 percent. Energy prices fell 5% on the month, but this drop was offset by the aforementioned increase.

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O’Leary added that the market rallied in the last three sessions as it was suggested that inflation would start to show signs of fatigue and slow down, but that hasn’t happened.

“Nothing else [aside from gasoline prices] slow down… Everything else keeps increasing. And so we’re in a very difficult situation here,” he said.

“We gave up our entire three days of earning in about 11 minutes of trading right out of the gate this morning.”

Real estate prices lag

However, the drop in housing prices is not reflected in the latest CPI data and the risk of a Fed hike remains, he added.

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Housing data in the CPI takes 16 to 18 months to be accurately reflected, and there is a disconnect because housing is a large part of the inflation data.

“The way the Fed calculates inflation is that the change in housing prices has started to decline, which is not reflected in the CPI data,” he said.

“This really means that there are some risks that the Fed has overcome.”



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