During an interview on “Varney & Co.” Friday, Key Advisors Group LLC co-owner Eddie Ghabour warned the markets are not “anywhere close” to a bottom and said investors need to take the threat of recession “seriously” as inflation hits a new 40-year high.
EDDIE GHABOUR: The Fed is going to have to force a recession to get inflation down. This is what we’ve been warning about. This is why we have not been fully invested all year. Investors need to take this seriously. Trying to pick a bottom in this type of environment is dangerous, and I don’t think we’re anywhere close to a bottom. So they need to take these opportunities to protect their hard-earned capital before it gets a lot worse.
If you think about all this money that went in the system over the last two years, created, in my opinion, one of the largest bubbles of our lifetime. Now they have to unwind the balance sheet, which means these bubbles are going to be popping one by one. And it’s already happening. It happened in crypto first. It’s down 50%. NASDAQ down over 30 from its high. And you’re going to start seeing the larger cap plays do that. This market has to reset to where it was prior before we can move forward. So that means we need to be down at a minimum of 30% in the S&P, in my opinion, before we can even think about being close to a bottom. And lastly, the VIX has been so tame, you do not have a market bottom when you have so much complacency. The VIX is going to 40. We’re going down at least 30 plus percent, in my opinion. And investors need to protect their capital.
INFLATION HITS FRESH 40-YEAR HIGH IN MAY WITH CONSUMER PRICES SURGING 8.6%
WATCH THE FULL INTERVIEW HERE: