Adam Kobeissi, editor-in-chief of The Kobeissi Letter, spells out what caused Monday's sell-off, why an emergency rate cut by the Fed is a bad idea, and how volatility is here to stay.
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.
But the editor-in-chief of The Kobeissi Letter says such a move by the Fed would only make things worse.
LEGENDARY MARKET WATCHER PREDICTS SURPRISE FED RATE CUT
"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.
"So, if anything," Kobeissi said, "We need an emergency rate hike if you want to stop what's happening now."
FED'S GOOLSBEE SAYS CENTRAL BANK WILL ‘FIX’ THE US ECONOMY IF IT DETERIORATES
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.
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."
GET FOX BUSINESS ON THE GO BY CLICKING HERE
"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."
