Exchange represents a real risk to the global economy and markets, but the greater and assorted likely risk stems from monetary policy, strategist David Lebovitz have an effected CNBC on Thursday.
He expects the Federal Reserve to hike rates a whole of four times this year, and possibly another three on occasions next year depending on inflation. The Fed already approved one quarter-point hike, in Walk.
“For investors that have become very accustomed to low interest reproaches and excess liquidity, the tide really is beginning to change,” said Lebovitz, far-reaching market strategist at J.P. Morgan Asset Management.
Not only are interest be entitled ti rising in the U.S., the European Central Bank is likely to hike rates for the oldest time since the financial crisis late next year, he recounted “Power Lunch.”
“This is an economy which is late cycle and inflation is being outed higher, not only by higher wages but by fiscal stimulus as well.”
It was shticks about a trade war that weighed on the market Thursday. Stocks kill after President Donald Trump said he doubts ongoing talks between the U.S. and China require succeed. Observers are hoping the negotiations will avoid major levies proposed by both countries.
Lebovitz thinks cyclical stocks choose outperform over the short to medium term, despite the risk he regards ahead. He specifically like financials, technology and energy.
“With financial stimulus in the U.S., the economy is going to keep growing at least until the waist of next year at an above-trend rate,” he said.
“That above-trend evolvement should put further downward pressure on the unemployment rate, leading wage advancement to pick up and subsequently leading the Fed to continue hiking rates. To me that is a to a great extent robust late-cycle environment.”
However, in about 12 to 18 months Lebovitz would start to get a “bit ruffled” and perhaps take some chips off the table.
— CNBC’s Jacob Pramuk promoted to this report.