Hightower Webinar Series: Kevin O’Leary and Connor O’Brien Talk COVID, Stimulus and Economic Recovery

As a way to connect and share across the Hightower community during the pandemic, Hightower has been hosting regular online webinars with movers and shakers in the finance industry.
Our most recent session was a conversation with Kevin O’Leary and Connor O’Brien, Chairman and CEO, respectively, of O’Shares ETF Investments. Known as “Mr. Wonderful” on ABC’s Shark Tank, Mr. O’Leary is a seasoned investor with a long track record of success. Mr. O’Brien is a finance industry veteran with more than 25 years of experience in the markets.
During the hour-long conversation, O’Leary and O’Brien discussed the state of the virus, the stimulus package, and America’s road to economic recovery. Here are some key excerpts from the conversation, edited for clarity:

Connor O’Brien: Almost everyone on this call has lived through two or three financial crises, what do you think is different about this one?

Kevin O’Leary: Recessions usually start with six or so quarters of diminished economic activity. Things grind to a halt slowly, and then it takes us a year or two to get out of it. But that’s not what happened this time. We shut everything down in 48 hours, and the outcome of that is a tremendous, pent-up demand for goods and services. People immediately stopped spending money on the things they used to, like restaurants and entertainment, and a lot of them have some very strong buying power right now that’s waiting to be put to work. It’s only been 100 days, and this pent-up demand is not typical for a recession.

Connor O’Brien: The Fed has been extremely proactive during the past few months — have they done the right or the wrong thing? What are your thoughts on policy thus far?

Kevin O’Leary: I think from a policy perspective they’ve done a great job. In early April, everyone was worried about the money market breaking a buck, and if the Fed hadn’t moved quickly, that probably would have happened. Those moments are concerning for investors and for Wall Street, and so I do think the speed at which they implemented the Paycheck Protection Program was impressive, and I think the program worked. I will say, though, that the last trillion dollars the Fed is going to pour on this is unnecessary. They’re paying for it with 30-year paper at an impressively low interest rate. It’s a 20-year bond. Who would buy that? That’s the worst asset you could put your money into.

Connor O’Brien: In terms of the current interest rate environment, would you say that we are stuck in a flat interest rate environment forever?

Kevin O’Leary: No, not necessarily. I don’t see what happened in Japan happening here. With all the pent-up demand for goods, I actually see a very good outcome. I think interest rates will remain low globally.
I think the more interesting question, if you think about what this pandemic did, is what do we do if this continues to happen? COVID is so much worse than the flu – doesn’t the G20 have to put into place a pandemic protocol that everyone should adhere to? That would create an economic recourse for the country where everything starts.

I mean, if you don’t shut down travel, or keep business as usual going in your city, shouldn’t there be consequences? H1N1, SARS, COVID-19; they’re all coming from the same place. It’s getting expensive. It should be incorporated into the trade deal with China, which would make investors feel a lot better.
Connor O’Brien: What supply chain changes do you think are going to happen? How fast do you think we will see this on the healthcare side?
Kevin O’Leary: The supply chain was already moving out of China for cost reasons. Let’s look at Switzerland: They have a policy of keeping “just in case inventory” on every supply they need. If they have to shut the country down for 24 months, they have military supplies, pharmaceutical supplies, food supplies. We need to run America like Switzerland in that way. And I think we have a huge investment opportunity in bringing back logistics and supply chains to North America.
To learn more about how Hightower is helping its advisors stay connected during the pandemic, email us at advisorsuccess@hightoweradvisors.com.

Hightower Securities, LLC, is a member FINRA and SIPC & Hightower Advisors, LLC is a registered investment advisor with the SEC. All securities are offered through Hightower Securities, LLC and advisory services are offered through Hightower Advisors, LLC.