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Kevin O'Leary: We're Not Out Of The Woods On Rate Hikes Yet

Kitco News

Editor's Note: For the full interview with Kevin O'Leary, click here.

(Kitco News) -  Despite the Fed’s more dovish tone of late, investors can expect further rate hikes in 2019, this according to “Shark Tank’s” star and Chairman of O’Shares ETFs, Kevin O’Leary.

“I think it’s not impossible to get another 50 basis points [of rate hikes] in 2019, if we get an inkling of a trade deal with China, and that’s the other big reason you need to stay long equities,” O’Leary told Kitco News.

O’Leary’s comments came in an interview with Kitco News on Monday, ahead of the Federal Reserve's first monetary meeting of 2019 on Wednesday, when they announced no changes to interest rates.

The Fed raised rates four times in 2018 and is now holding the benchmark interest rate in a range of 2.25 to 2.5 percent.

“In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes,” the Fed said in its statement Wednesday.

O’Leary noted that the U.S. central bank’s monetary policy this year will be largely dependent on the outcome of Trump’s trade policies.

“If we woke up tomorrow morning and Trump cut a deal that protected us against intellectual property, gave us access to markets, and stopped government subsidies to Chinese companies vis a vis competitors internally there, the market would go up 15% in a week,” he said.

U.S. and Chinese officials are meeting on Wednesday to continue trade talks. The two sides must reach a deal before March 1st, when the U.S. is scheduled to increase tariffs by another $200 billion worth of Chinese goods.

The stock markets in the U.S. have performed well so far in 2019, with the S&P 500 up 7% year-to-date and the Dow Jones Industrial Average rallying 8% in the same period.

On investments, O’Leary advised to stay long on equities but to stay vigilant on geopolitical risks.

“For me, it’s finding quality, sitting in the weeds, making my two-and-a-half percent dividend yields, with a good quality company, waiting for the administration to deliver in the next two years a trade deal with China,” he said. “That’s going to be the next leg up in the market.”

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.