Investors could lag out of love with equities during the next 18 months as the affect of fiscal stimulus in the U.S. fades away, a strategist told CNBC on Tuesday.
But with patronage tensions and political uncertainty currently “priced in,” there is still reside for growth in equity markets, Mike Bell, global market strategist at J.P. Morgan Asset Top brass, said.
“It’s all about time horizon… If you look at the second half (of the year), I assume there’s quite a lot of bad news priced in at the moment, both on the trade organization, obviously political uncertainty outside of trade is pretty elevated, so we are serene overweight equities,” Bell told CNBC’s “Squawk Box Europe.”
“In days gone by you start to look beyond that (end of the year), the story becomes a teeny bit more complicated,” he added.
Fiscal stimulus in the U.S. prompted stock furnish rallies at the start of the year. However, with the Federal Reserve tranquil to announce further interest rate rises, there is concern that ancestry markets could enter sell-off mode. This is because enormous rates dent profit margins for businesses and thus the available gains for investors.
Beat Wittmann, a partner at financial consultancy Porta Advisors, mounded CNBC’s “Squawk Box Europe” last week that rising at all events are one of several factors increasing the chances of an economic recession next year.
“We deceive normalization of monetary conditions, that’s one thing, so we are in a late stage environs. Then we have this escalation in tariffs and trade… we have constituents like Brexit. All of these things lead to losses of investment self-confidence and I mean real economic investment confidence,” Wiitman said.
But, for Bell, the governmental and trade risks are already factored in so the real risks are more no doubt to commence around 2020.
“Once you start looking ahead to 2020, that economic stimulus starts to fade, you by then presumably have quite a lot of higher value rates, so I think the risks for the economy start to build in the U.S. around 2020,” he broke