The Kobeissi Letter editor-in-chief Adam Kobeissi explains what happened in Mondays massive sell-off, how an emergency Federal Reserve rate cut would make things worse, and what investors can expect now.
Market watcher Adam Kobeissi says after Monday’s global meltdown, volatility is here to stay – and he believes that’s a good thing.
Stocks began the week with their worst day in years, when a massive sell-off that began in Japan due to a rate hike that disrupted the yen carry trade and reverberated to Europe and the U.S., triggering calls by some for the Federal Reserve to implement an emergency rate cut.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Oct. 12, 2018. A global sell-off on Monday sparked calls from some experts for the Fed to make a surprise rate cut. (Michael Nagle/Bloomberg via Getty Images / Getty Images)
But the editor-in-chief of The Kobeissi Letter says such a move by the Fed would only make things worse.
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“Look, markets are bouncing back and actually we need the opposite of an emergency rate cut, because if you cut rates right now, you are cutting rates more aggressively than what the markets are forecasting already,” Kobeissi told FOX Business in an interview Tuesday.
He argued that trimming rates in the U.S. would weaken the dollar against the yen even further, and broaden the spread between interest rates in the U.S. and Japan, making the trend even worse.
Federal Reserve Chair Jerome Powell attends a press conference in Washington, D.C. on May 1, 2024. (Photo by Liu Jie/Xinhua via Getty Images / Getty Images)
“So, if anything,” Kobeissi said, “We need an emergency rate hike if you want to stop what’s happening now.”
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Kobeissi noted that other factors contributed to the sell-off, including recession fears and rising geopolitical tensions, but “we’re not projecting a massive crash situation, right now.” His group bought the dip.
“I look at these swings, these corrections, bear markets, as gifts,” he explained.
The Kobeissi Letter editor-in-chief Adam Kobeissi and Capitalist Pig Hedge Fund manager Jonathan Hoenig discuss whether Nvidia’s stock dip is a sign the market rally is over on ‘Cavuto: Coast to Coast.’
Kobeissi said bear markets are actually some of the best opportunities for long-term investors, saying such pullbacks are an opportunity to find some bargains. At the same time, he said, those who are more short-term focused can take advantage of huge swings that are “a trader’s dream.”
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“I’m actually welcoming this volatility after two-plus years of just a steady grind higher, and I think, the volatility is definitely here to stay,” he said, adding, “It’s a great opportunity for those who are positioned to take advantage of it.”
