Adam Kobeisi, editor-in-chief of the Kobeisi Letter, explains what happened in Monday’s big sell-off, whether the Federal Reserve’s emergency rate cut will make things worse, and what investors can expect now.
Market watcher Adam Kobeisi said on Monday that volatility is likely to continue after the global financial crisis, and he thinks that’s a good thing.
Stocks began their worst week in years after a major sell-off that began in Japan due to an interest rate hike disrupted the yen carry trade, spreading to Europe and the United States and sparking calls for the Federal Reserve to make emergency rate cuts.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., Friday, Oct. 12, 2018. Monday’s global sell-off in stocks has some experts calling for the Federal Reserve to make a surprise interest rate cut. (Michael Nagle/Bloomberg via Getty Images/Getty Images)
But Kobeisi Letter’s editor-in-chief says such a move by the Fed would only make things worse.
Legendary market watcher predicts surprise Fed rate cut
“The market is recovering and we need the opposite of an emergency rate cut, because if we cut rates now, it would mean we’re cutting rates more aggressively than the market is already anticipating,” Kobeisi said in an interview on Fox Business on Tuesday.
He argued that the US interest rate cuts would cause the dollar to fall further against the yen, widening the interest rate gap between Japan and the US, exacerbating this trend.
Federal Reserve Chairman Jerome Powell attends a press conference in Washington, DC on May 1, 2024. (Photo by Liu Jie/Xinhua via Getty Images)
“So if we want to stop what’s happening, we need emergency rate hikes,” Kobeisi said.
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Kobeisi said he was concerned about the economic downturn and Rising geopolitical tensionsBut “we’re not anticipating a major sell-off situation at this point,” he said. His group bought on the dips.
“I see these fluctuations, corrections and bear markets as gifts,” he explained.
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Kobeisi said bear markets are actually some of the best opportunities for long-term investors, as these declines are a chance to find bargains, but that short-term oriented investors can also take advantage of big swings, which he said are a “trader’s dream.”
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“After more than two years of steady increases, I actually welcome this volatility and I think it’s definitely here to stay,” he said, adding, “It’s a great opportunity for those in a position to take advantage of it.”
