Mike Novogratz predicted the market sell-off. Here's what he thinks will happen next
Galaxy Digital CEO Mike Novogratz discusses the pattern of staggered market selloffs and says investors should expect to see a continued decline in tech stocks.
Two weeks ago, former hedge fund manager Mike Novogratz predicted in a tweet a U.S. stock market sell-off. Now, in the midst of the worst October for stocks since 2008, Novogratz said he believes the pillars holding up a strong market are beginning to crumble.
The CEO of Galaxy Investment Partners, Novogratz said he believes steadily rising Treasury yields – which he said have been hovering around 3 percent all year – could deter possible growth.
“You’ve got rates becoming a headwind, at the same time we’re coming into an election where most likely the Dems will win the House,” he said on Friday during an exclusive interview with FOX Business’ Liz Claman.
Coupled with midterm elections less than two weeks away that will determine the political landscape of Congress (FiveThirtyEight favors Democrats winning the House on Nov. 6 at 84.5 percent) and tightening short-term interest rates by the Federal Reserve, Novogratz warned that people would continue to flee from the stock market.
“You’ve had the Trump train going for a while, he’s had both the House and Senate,” he said. “And if you have a Democrat House, it’s just going to be noise and noise and noise. The Trump agenda gets muted some.”
On Friday, after a volatile week led by falling shares of major tech companies, the Dow Jones Industrial Average lost 296 points, or 1.19 percent, though stocks recovered much of their losses from earlier in the day. The broader S&P 500, which briefly dipped into correction territory, declined about 1.7 percent. The tech-heavy Nasdaq Composite fell 2.06 percent.
According to Novogratz, the major tech sell-off – precipitated by mixed quarterly results from Google and Amazon – will likely continue. Most likely, investors will turn to cash or emerging markets instead.
“You’re going to see a continued roll out of tech, just because that’s where everybody was,” he said. “So people are going to get out of Google, they're going to get out of Apple.”