Also in this playlist...
This transcript is automatically generated
Our next guest says stock to keep driving high and the rest of the year but not it's not going to be an easy ride Jeff -- -- his chief market strategist at LPL financial.
He joins us now from Boston Jeff thanks for being here.
You know we keep saying this is the most -- Bull rally of history and still seems that way to me is certainly been a difficult one to navigate along the way you say we have most surprises.
Install one of those do you think and how can investors.
What we've got positive ones and negative ones that so we've got -- pauses in the in the sense that you know the government sector of our economy.
It's gonna shrink to the smallest percentage in a decade.
And the latter half of this year.
And along with that we're gonna see that drank from a higher taxes -- the spending cuts we saw a bald headed in the first half of this year begin to -- that's a domestic economic boost.
Which don't which I think is gonna help -- employment good help with business spending as well so that's the positives than negatives of course we know the Fed likely to taper.
In Europe they're gonna have those key German elections on September 22.
Citing the fate of the Euro zone.
And then of course we've got the debt ceiling back in focus here somewhere towards October so that's got -- great some ups and downs in the market but.
They didn't said that you want to continue to -- it's been a successful strategy all year.
With that in mind what would you buy in this environment.
I think you want to focus on domestically oriented businesses think smaller cap consumer discretionary.
At the health care sector -- benefit from a stronger dollar.
Better employment growth within the US and we've -- private sector employment continued average about.
200000 jobs a month we think that can continue maybe even accelerate both pauses for those sectors those -- a couple of key areas financials also standout here as longer term interest rates begin to rise -- lending begins to pick up banks stand to benefit from that in terms of their net interest margins -- that's true but then these banks -- facing these extra regulations raising the leverage ratio I mean ultimately does that mean they don't lend as much because I have to keep more money on the books.
And that ultimately could -- the bottom line.
Well that's true -- -- -- adequately reserved for the leverage ratios and in a lot of the other regulations that have been put on top of that now -- questions you know going forward does that change their lending standards.
The key as they've been lowering standards we've seen every quarter really since the middle of 2011.
They've been lowering standards for -- and I think that's gonna continue despite the new capital requirements.
And that's really what turned around housing a lot of focus lately on higher interest rates and when that may mean to the economy in the consumer but the truth -- isn't so what's the cost of credit meaning interest rates but the availability of credit district in this economy.
And housing in particular and that's only gotten better.
What sectors would you touch with a ten foot pole right now.
Though I'm not I don't like those yield sensitive sectors utilities and Telecom.
They worry me a lot I think interest rates are gonna continue to move higher they're gonna lag and we'll -- till the commodity focused areas like energy and materials we've still got global excess capacity -- a lot of those areas.
That's probably gonna continue to be -- a -- All right so what about the bomb markets -- of you know frenzy -- around this particular market is there any.
How to fix things -- you like perhaps corporate debt in particular.
In particular corporate debt looking out higher yields still looks attractive.
That -- you call them high yield anymore may there be any elbit.
There's certainly still attractive from a high interest rate protection -- -- they're not gonna suffer as much as interest rates move up that you're getting paid.
A pretty good -- hear from those businesses.
They have a lot of Cassel right now so.
Those that area looks pretty good to us in the Canadian bank loans as well another -- -- focus on getting credit exposure as interest rates rise the the amount paid almost -- -- -- -- as well so it's good insulation against rising interest rates as we're getting into this second quarter earnings season Jeff what are you looking for in particular what you -- -- see what would you like to see.
Well there's a few things -- we want to hear get guidance from companies that they're actually gonna do some hiring and spending in the second half of but you know more realistically.
-- focused -- buybacks.
That's been a winner all -- come but you wanna buy the buyers the company.
Is they're doing the most buying back of their own shares -- doing the best this year that some people affected next up 25% this year vs roughly fifteen for the overall S&P 500.
So what -- -- -- -- new buyback authorizations.
In the implementation of those programs because those companies are likely to continue to be the winners that's government should only be putting that money to use expanding their business and hiring I mean it's great for the shareholders get a nice pop in the share value but doesn't really speak to a healthy economy.
What you're right you'd certainly like that is to see them get off the dime a little bit and spend a bit -- that passport.
-- -- -- -- you know to some extent that they are you know private sector hiring is picking up slowly.
A business capital spending is picking up -- You know I.
I think what we need to see is those initial steps at least towards.
Better cap banks we're gonna see that -- the durable goods report wait before we're I think we're now batting company's earnings report so what's his economic releases closely.
As always great information Jeff -- top of LPL financial thanks for joining us -- -- I think you making great friends say I'm -- accounting trickery but who -- now you've -- to -- your shoulder your cellular that but -- I'm not sure it speaks to the great I really picked him.
Tell them things that have nothing else better to do right.
Filter by section