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Talking to Bloomberg Surveillance about stocks and bonds Wednesday, J.P. Morgan Asset Management’s David Kelly said now is the time to jump back in.
JPMorgan’s chief global strategist anticipates that US equities will see an 8% long-term gain and also said bonds are now attractive, recommending investors have a strong fixed income allocation.
The bond market, alongside equities, has sold off strongly in 2022. However, Kelly told Bloomberg that it is time to be overweight equities for a long-term investor.” He added that he also thinks “bonds are back.”
With inflation data set to be released on Thursday, Kelly explained that the consumer price index has already peaked and inflation should decline gradually through the beginning of 2023. However, he believes that may not be enough for consumers based on the political divide in the U.S.
“Republicans always feel worse about the economy when there’s a Democrat in the White House and vice versa,” said Kelly.
He added that the one thing coming out of the mid-term is that there will be no fiscal stimulus before 2025, “so at some stage, this economy weakens or falls into recession.”
Kelly feels the “only game in town” will be the Federal Reserve slashing interest rates to stimulate the economy.
