Nicholas Mugalli, Founder and CEO of World Trade Securities, to discuss his top investments for the second half of 2022.
Mugalli— who has made a name for himself by betting against some of the market’s most popular stocks like ARK Innovation ETF, Tesla and Facebook — discusses his outlook for the U.S. tech giants and more. After previously warning of historic market bubbles in some assets, the Hedge Fund Manager says now it is time to BUY.
“There’s a set up in place for a major bottom to be placed sometime in the next two weeks”. Mugalli says.
Inflation rose more than expected in October as growing food and shelter costs offset the rebound. The Bureau of Labor Statistics reported Thursday of last week in gas prices.
According to BLS data released Thursday, consumer prices rose 0.4% in September and were up 8.2% from a year ago. Excluding food and energy, the core consumer price index accelerated. 0.6% and 6.6%, respectively. The yearly gain for the core was the highest since August 1982.
Worker wages took another hit, falling 0.1% monthly and 3% yearly when adjusted for inflation. Markets now expect the Fed could institute consecutive 0.75 percentage point rate hikes in November and December.
However, Mugalli says he’s “optimistically cautious” about how fast the Fed moves with interest rates. “I have zero doubt that Jay Powell will do the right thing here, but I’ll tell you what, we are going to see a surprise melt-up after that with emerging markets leading the way, and I encourage people to take a look at the data and ignore all the negativity and uncertainties in the markets. People who cashed out last year and stayed cash throughout the last bull-run cycle are deploying their capital–and yes I am one of them, and I am putting my money where my mouth is by purchasing discounted Stocks & Bonds at these levels”.
Despite tech names hitting lows, the market’s decline in the first three quarters of 2022 was not a negative but a potential entry point for investors.
That’s because since 1946, the S&P 500 has gained an average of 28.2% over the next five quarters after sinking for the first three of a calendar year.
“It’s important to also note It’s the midterm season. We are heading into the Midterm Elections, and I want to point this out to the air. Since 1942 the S&P 500 had major positive return rallies, and frankly, I am expecting the same thing here. In fact, treasuries at these yields could be the catalyst for a reflationary comeback just as COVID headlines worsen,” Mugalli says.
Midterm years tend to be rocky for stocks, especially under Democratic presidents. Whileall midterm years show an average gain of 6% in the S&P 500, midterms under Democratic presidencies have an average gain of 4%. Narrow the list of midterms down to first-term.
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