J.P. Morgan Funds’ chief market strategist David Kelly says that contrary to central bank utterances, there isn’t much slack in the economy — even if growth is slow. Strike one, Janet Yellen.
In a speech at the Morningstar annual conference, Kelly compares the turtle-like pace of the economy to a New York-Boston baseball game. Getting to even a growth rate of 1.5% will take time. Nonetheless, the job market is still tightening, CNBC reports him saying from Chicago. That looks like strike two!
Don’t expect a bear market yet, but the U.S. economy will run out of growth in the next two years, predicts Kelly. He advises “very careful” investing in emerging market stocks, and stocks in sectors like tech and finance that won’t get hurt by rising rates. For bonds, diversify with Europe and emerging markets.
“In the middle of a bear market, really all you need is the courage [to invest],” Kelly said. “When markets are high, lots of people have the courage, but it is the brains that are needed.”
Photo: Keith Allison via Flickr.