Kevin O’Leary, chairman of O’Leary Ventures, on Tuesday shared insights into a host of issues, including inflation and his outlook on the economy and the election. He also weighed in with his thoughts on Tesla CEO Elon Musk.
Sticky Inflation: The producer price inflation report for July showed wholesale prices cooling more than expected but O’Leary said the softening isn’t enough. In an interview with Fox News, he noted that the market is now deliberating whether there would be a 25-basis-point or 50-basis-point cut in September. The bond rates, specifically the two- and ten-year show that inflation is “very, very, very sticky,” he said.
The Canadian business sees the Fed facing a tall order as its mandate is 2%. “So, do they take the brakes off now and just start cutting right now? I think it should be, I'm kind of in the maybe 25 basis point and wait and see,” he said, adding that the report, though interesting, suggests there’s a lot of inflation in the system.
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Market Outlook: Despite the extended rally seen since the stocks emerged out of a bear market in late 2022, O’Leary thinks there is an opportunity. It’s not the Fed that ultimately drives the market but it is earnings that move the market, he said. “So people are trying to guess what is the story on earnings,” he added.
O’Leary also noted that on the economic front, although there is some weakness, consumer data has remained resilient. Investors are also encouraged by the promise of AI productivity in the next two years, he said.
The recent sell-off, according to O’Leary, is due to the pricey nature of eight or nine tech stocks, which trade at over 40 times vis-a-vis the market, which trades at 30 times. “when those things go down, it pulls down the full S&P 500,” he said.
He also pointed to a lack of policy, which is creating uncertainty. “Most of us make the assumption that [Kamala] Harris and her team will give us platform policy after the conventions,” he said. “So, we're waiting for that; if she doesn't that'll get a little crazy because there is going to be a lot more volatility in the market.”
While answering a question on whether Harris is a changed person now from 2020, O’Leary said, he is a “show-me person.” “If you've really changed, if you're really going to the middle with policy, show me, get in front of a reporter let them ask you some questions and give your platform out,” he said.
He also clarified that he was bipartisan when it comes to investing. “I'll invest with Democrats or Republicans but I got to know the platform, I got to know the policy so she's really going to move to the middle on things like fracking and energy and border and interest rates and foreign affairs and all that stuff,” he said.
On Musk: O’Leary said he is a “huge fan of Elon Musk.” “I think that guy is a modern-day Bruce Wayne and if he got involved with government it would be a good thing for everybody in America,” he said, adding that “the guy is no BS guy.”
The Tesla CEO is very transparent, and he really knows what he is doing, O’Leary said. He also lauded Musk for his execution skills. “You may not like him, you may not like his communication styles but look at when he's accomplished,” he said. “If we could get more Elon Musk in the government this country would not be in the situation that it is in,” he added.
Musk on Tuesday batted for a government ‘efficiency’ committee and expressed interest in joining such a committee in a potential Trump administration. “A tremendous amount of growth and opportunity would be created by deregulation and reduction of wasteful government spending,” he said on X.
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