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LPL Financial economist John Canally on how Congress could set the tone for businesses and the market better than the President.
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Report so Detroit twelve elections are right around the corner but as an investor should you focused on the presidential or the congressional races the answer may surprise you.
LPL financial is John finale is here with the firm's midyear outlook and what you need to know ahead of November.
Let's let that question first that was I was interested to see that you guys are more focus on the congressional election and presidential why is that.
Did it just seems to matter more these days you know who controls congress you -- you can't really get anything done unless you have.
Both parties or one party in power of both houses.
That's looking increasingly likely right now the Republicans -- -- Keep the house of might pick up just enough sense -- -- two.
Gain control of the senate I think that would be the outcome the markets would favor the most if if the Republicans were to pick up.
The senate and -- retain the house to just be easier to get things done I think normally hear that gridlock is good right I would argue with the fiscal cliff.
Good luck would be debt.
Okay seething mostly because of the tax issues that we're looking at -- or any other reason why you think that Republicans -- control both would be beneficial to markets.
Yeah I just think.
Markets so wouldn't welcome that.
Largely again because of their fiscal cliff issue I think and and the way that's resolved right I mean if if it's split party.
One has -- one has the other you'll likely to see more tax increases and spending cuts like -- I think if you have the -- Republicans controlled both.
He's still bet that's you wouldn't even right now at a presidential election where -- -- to such divergent paths that the government could go down you don't think.
That the president one where the others can really set the tone for business in America.
-- Think got the margin yes but I think we're all the real work gets done in congress that's where that.
I think that's really what matters further market could remember if -- if we're sitting here a year from today on on July 5 2013.
And we have not address our fiscal problem and a meaningful way.
World we're likely thing to get another downgrade and and that's really in Congress's control.
To to make those chain without question -- OK here you see economy growing at about 2% for the rest -- your what's your outlook for the rest this year and into next.
-- -- -- -- it's modest growth I think you know we started the year.
Well below consensus and the consensus has sort of caught up to us are part caught down to us if you will.
We still see you know stock returns for the year between eight and 12%.
Were only about three or 4% below that now.
What we still do see more volatility over the course of the summer yet have the fiscal cliff looming we talked about that you have.
More.
-- certainly in Europe certainly.
And -- I think just general market volatility will will -- how -- you -- you have knowledge they really need to make money event.
Yeah -- LA I think you have to be extremely tactical these days and I don't mean market timing but just knowing.
We know when to get in when figure out what the trends are so for example right now -- or in the -- we're just about the start the earnings reporting season.
And typically in the earnings reporting season the first.
Couple weeks after the first report is usually the best time to be in the market.
And then after that the returns get a little bit less than just those -- a little.
Nuggets that you have throughout the year those can be really very very helpful and what would you focus on.
Well you know right now we are focused mainly on the technology sector were were kind of more large cap is as well we're certainly.
Almost all of domestic -- -- have any exposure overseas.
And then over in the bond market side of if you take -- -- -- -- -- -- we still -- over the rest of the -- you'll still -- A high yield bonds outperformed treasury bonds just -- there's such a pretty big opportunity there.
You know most high yield issuers have.
Plenty of cash there there's the bid to default rates relatively low so I think that's an area of opportunity especially with treasury yields down there 15160.
Not a lot of opportunity in the charter market Jack Kelly thanks for joining us.
