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LPL Financial Economist John Canally argues the jobs report adds to the case for further stimulus by the Federal Reserve.
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-- the market today was happy about the jobs report but our next guest was not impressed he says while the report was better -- washed out expectations.
It was still weak any thinks it does still help make the case for the Fed to introduce more stimulus later this year.
Joining us now John finale investment strategist and economist with LPL financial.
John you know I think a lot of people -- in your camp that more stimulus is coming.
Why was it because it's it -- -- good enough or it's not bad enough.
I think that the Fed has dual mandate from congress -- -- -- it is to keep up.
Inflation low and stable and to keep the economy running at full employment.
I think they're failing on the full employment side the economy growing too slowly to push own vulnerability found out today you know -- rate went up.
And then over on the inflation deflation side were probably closer to deflation -- inflation right now really disinflation.
So I think against that backdrop the Fed has to weigh his options they could do nothing.
But I think because it wants to fulfill its dual mandate it -- probably is going to act.
Next time -- would be September.
They might want to wait for October I think that's a little bit too close to the November elections but I think they're gonna act -- -- between now and then at the end of the year.
Really depends on Europe as well right I mean Europe's got to get its act together and it's not looking good so if -- -- does it.
It -- says if the Fed has no choice.
What to do something.
Yeah I mean they're the only game in town in Washington having congress is certainly in no mood to spend any additional.
Money to simulate the economy.
But they might be the only game in town around the world except -- for the Chinese but yet you're still custom.
Brilliant turn itself around it took them fifteen or twenty years into this mess Lusaka.
-- solve itself for the next fifteen or twenty -- review twenty weeks it's gonna take awhile so I think the Fed right now look at -- things.
We got to do so because don't know if we don't know.
-- you know it's really hard to swallow.
Your forecasts US economy's going in and grow about 2%.
And yet you're looking at a stock market that's gonna pose anywhere from eight to 12%.
Gain.
Huge dichotomy isn't there's still between the overall economy and the stock market.
Yeah I mean within the key there is that eight to 12% gain and and stock market.
In others top earnings that are -- overseas by RS and 500 companies close to 40%.
Of earnings come from overseas and remember emerging markets are growing three to four times as fast as we are here.
That's where 50% of our exports go that's why we can get you know -- to 12% GDP growth but -- Growth in the stock market may with a only having 2% GDP reveal your business is fairly broad but even shot at growing at.
Seven I have 3% that's more processes were were growing share that that helps.
You know help I know you like that technology sectors industrials -- you are you're elevating your cash position.
I presume it's because you're nervous about what's happening what percentage of a portfolio are you recommending people holding cast these days.
Yeah we we started to get a little bit more -- on the market back in February we you know we we achieved our.
Market harder for the year back in February we looked around and said well -- -- really.
No change -- our forecast that we started to get.
A little -- this defense of that.
Just recently here we we start to pare that back put the working things like.
Muni bonds which we think there's a good opportunity there between now and the end of the year.
High yield bonds still have have a pretty good Ron -- between now and the end here as well also -- slightly defensive relatives or benchmarks.
But we've been there largely since February but were continue to work that cast doubt -- good opportunities and market and putting it to work.
That's some definitely she still -- John finale thanks so much for sharing your thoughts have a great weekend.
