Kevin O’Leary, Chairman of O’Leary Ventures, provided insights on a range of topics on Tuesday, including inflation and his outlook on the economy and the election. He also shared his thoughts on Tesla CEO Elon Musk.
Slow inflation: The July producer price inflation report showed wholesale prices had cooled more than expected, but O’Leary said the slowdown was not enough. In an interview with Fox News, he said the market was now considering whether there would be a 25 or 50 basis point cut in September. Bond yields, particularly the two- and 10-year, showed that inflation was “very, very, very stubborn,” he said.
The Canadian firm sees the Fed facing a big challenge as its mandate is 2%. “So, are they going to take the brakes off now and start cutting immediately? I think that’s how it should be. I’m at maybe 25 basis points and wait and see,” he said, adding that while the report was interesting, it suggested there was high inflation in the system.
See also: Best Inflation Stocks
Market outlook: Despite the sustained rally seen since stocks emerged from a bear market in late 2022, O’Leary believes there is an opportunity. It’s not the Fed that ultimately drives the market, but it’s earnings that move the market, he said. “So people are trying to guess what the story is on earnings,” he added.
O’Leary also noted that on the economic front, consumer data has remained stable despite some weakness. Investors are also encouraged by the prospect of AI productivity over the next two years, he said.
The recent sell-off, O’Leary said, is due to the high price of eight or nine technology stocks that are trading at 40 times their market value, while the market value is 30 times higher. “When those stocks go down, it drags the entire S&P 500 down,” he said.
He also pointed to a lack of policy that creates uncertainty. “Most of us assume that (Kamala) Harris and her team will tell us the platform policy after the conventions,” he said. “So, we’re waiting for that; if she doesn’t, it’s going to be a little crazy because there’s going to be a lot more volatility in the market.”
Asked if Harris was a different person since 2020, O’Leary replied that he was a “show me person.” “If you’ve really changed, if you’re really going to the center with your politics, then show me, get in front of a reporter, let them ask you some questions and announce your platform,” he said.
He also made it clear that he is bipartisan when it comes to investing. “I invest with Democrats or Republicans, but I know the platform, I know the politics, so it’s really going to move to the center on issues like fracking and energy and borders and interest rates and foreign policy and all that stuff,” he said.
About Musk: O’Leary said he is a “big fan of Elon Musk.” “I think this guy is a modern Bruce Wayne and if he got involved in government, that would be a good thing for everybody in America,” he said, adding, “The guy is not a motherfucker.”
The Tesla CEO is very transparent and really knows what he’s doing, O’Leary said. He also praised Musk for his execution skills. “You may not like him, you may not like his communication style, but look at what he’s accomplished,” he said. “If we could get more Elon Musk in government, this country wouldn’t be in the situation it’s in,” he added.
Musk on Tuesday advocated for a committee on government “efficiency” and expressed interest in joining such a committee under a possible Trump administration. “Through deregulation and reducing wasteful government spending, tremendous growth and opportunity would be created,” he said on X.
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