Investment guru Ken Langone says he used Tuesday’s stock market drop as a buying opportunity.
“Where else can you go to get some kind of a decent rate of return, than equities,” Langone told CNBC.
The Home Depot co-founder says he added to positions in J.P. Morgan (JPM) and Parker-Hannifin (PH). He says he also likes General Electric (GE) again. “Yesterday, I was adding to my positions,” Langone said. “I have so much Depot it’s not prudent” to buy more.
“Balance sheets are in pretty good shape. I think the economy has got 1.5% to 2% in it next year,” he said.
U.S. stocks sold off for a third consecutive session on Tuesday after comments from President Donald Trump and Commerce Secretary Wilbur Ross threw cold water on hopes of a possible near-term respite from the market-bruising U.S.-China trade war, Reuters reported.
The blue-chip Dow had its worst day since Oct. 8, and all three major stock indexes backed further away from last week’s record highs that were fueled by optimism that an interim deal between the United States and China was in the works.
That optimism was dampened as Trump suggested a deal might have to wait until after the 2020 election, and separately, Ross confirmed that new tariffs on Chinese imports would take effect on Dec. 15 as scheduled, unless substantial progress was made.
Those remarks, on the heels of France’s threatened retaliation over potential new U.S. duties on French products, itself a retaliation against a proposed French “digital tax,” suggested that America’s hydra-headed tariff war against its major trading partners would continue to dominate markets for the foreseeable future.
Speaking to reporters in London, Trump raised the possibility of the trade deal being delayed until after the U.S. presidential elections in November 2020.
“I have no deadline, no. In some ways I think it’s better to wait until after the election with China,” Trump said ahead of a meeting of NATO leaders.
Trump downplayed the stock market’s Tuesday losses as “peanuts” when compared to both the economic importance of striking a favorable trade deal with China and the market’s gains since his election, CNBC reported.
The Dow Jones Industrial Average “was about 16,000 or 15,000 and now it’s almost at 30,000,” Trump said an international NATO summit in London. “It’s going to be at 30,000,” he said.
“If the stock market goes up or down: I don’t watch the stock market. I watch jobs. Jobs are what I watch,” he added. Today’s move is “peanuts compared to — We have picked up record numbers so that’s OK. That’s the way I feel.”
“It can’t be an even deal: If it’s an even deal it’s no good,” the president said.
Ross also told CNBC that he expects staff-level talks with China to continue but there are no high-level meetings scheduled.
“The setback in the Chinese trade negotiations, coupled with tariffs on the French with regard to the digital tax and tariffs on Brazil and Argentina for steel, when you add that up it was disappointing to the markets,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.
“The long-term impact of these negotiations could very well be positive, but the short-term implication portends a slowing of the economy and that’s not viewed well by the markets,” Massocca added.
Meanwhile, Newsmax Finance Insider Mohamed El-Erian warned that the recent sell-off should serve as a warning to investors that short-term optimism is colliding with more entrenched uncertainties.
"The three-day sell-off in U.S. stocks, which has wiped nearly 2 percent off the value of the S&P 500 Index, is a timely reminder to investors that they need to temper a bias toward short-term optimism with the recognition of unusual uncertainties stemming from the global system," he wrote in a Bloomberg Opinion column. "It also raises interesting questions as to the best tactical response to what I believe will be increased volatility leading up to the 2020 elections, if not beyond."
Material from Bloomberg and Reuters has been used in this report.
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