Plenty of good places to ‘hide’ as interest rates rise
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As the U.S. interest rates rise, investors have the opportunity to invest in companies located in the U.S. S&P 500Kevin O’Leary, CNBC’s Kevin O’Leary stated that this can help “increase their price” while “maintaining margins”.
They are plentiful. It’s an excellent place to hide when your dividend yield is 2%,” the investor celebrity said on Thursday.Squawk Box Asia.”
O’Leary’s remarks came shortly after the Federal Reserve increased its benchmark interest rateAccording to market expectations, the rate will rise by half a percent on Wednesday.
Fed Chair Jerome Powell indicated that raising rates by 75bps “isn’t something the committee are actively considering,” despite market expectations pointing heavily towards the Fed increasing its rate by 34 of a percent in June.
O’Leary also questioned the steep rise, but added that markets remain “in the growth cycle.”
“I doubt that this is going to be the case. Europe has many worries, and you have Europe’s concerns. Russian invasion of Ukraine. Have you got? supply chain issues“Western wheat and other commodities are coming because Ukrainians will not put winter wheat into,” he stated.
“There [are]There are many things you should be concerned about which, I believe, holds the Fed back. That’s where you can be your friend.
I think Powell can glide in the plane for soft landings. You can stay long in long equities if you believe he can. THe is a venture capitalist and also the co-host of Shark Tank. O’Shares ETFs.
“The market by the end the year [will go through]Many of these are available. volatility — a lot more 1000-points daysHe said that the Dow Jones Industrial Average plunged 1,063 point after Wednesday’s rate increase.
It impact of inflation on cashIncreased interest rates long bonds — like the U.S. 10-year Treasury bond — also leave little optionality for people, O’Leary said. O’Leary stated this because he plans to focus his attention on equity markets and purchase shares from companies that possess “some degree of pricing power”.
It’s “the most durable, and it is the most secure of capital. Equities still perform in inflationary times … you may argue that it’s not enough pricing power, but it’s way better than the long bond. This is certainly better than cash, right now.
What are the best places to look for compelling yield?
O’Leary answered the question, “Where investors will find the highest returns?” and narrowed his answer to energy and healthcare stocks.
He said that energy was a “real bellwether” in terms of yielding dividends. Some of the stocks are up to 7, 8 9%.
“People worry about how the oil price will change. Russia will be sanctioned, but that won’t mean prices will go up. [And]There is more American production.
It’s not bad to consider a conservative mandate with large dividend and capital payers. You can hide in it.
Kevin O’Leary
Chairman of O’Shares ETFs
He said that health care has suffered a lot.
O’Leary stated that although many biotech companies were crushed by the corrections, they will continue to grow.
“Moderna, for example, pretty good numbers … I’m invested there, as well as in Pfizer. You can find them here [are]”There are places right now, and the economy is changing, that seem very, very promising just about sales and distributions back towards shareholders,” he said.
I believe it is a good idea to go into a conservative mandate with large dividend and capital payers. This is a good place to hide.”
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