“Please don't ever let how you feel about politics impact your investing. Investing is all about the facts.”
He believes a short-run slowdown is coming and maybe a 40% chance of recession. Either way, we should have slow growth, slow inflation.
He talked about the tax cut sugar high starting to wear off in GDP growth.
Kelly is concerned about business confidence. He's not concerned about consumer confidence and joked that when the going gets tough, Americans go to Costco, and more worried if we start to have corporate layoffs and hiring freezes.
We talked about the three things that make him comfortable:
He calls this slide the four horsemen of an economic apocalypse, and they aren’t screaming red.
- Rates are still low.
- “It's really hard to injure yourself jumping out a basement window.” Meaning we don't exactly have extreme confidence in the stock market right now.
- He talked about November 2016, and how people invest how they feel based on the economy and their political party. It's just been hard for Americans to agree on how the economy is doing based on who is president, but that gives us some protection because about half the country thinks things are going great. See below.
He joked that inflation is most boring chart in the guide. Inflation has been flat for 30 years, largely because of technology.
Rising income inequality is a serious problem. “Right now if ten people walked into 7-Eleven. The 10th person has about the same wealth as the other 9 combined.”
The rich do not spend their money like everyone else. They only spend about 59% of their income, versus 101% for the bottom 90%. That money is going into the market in real estate, boosting of asset prices, while we have a slow economy and struggling markets.
We might get one more quarter-point rate cut in October. He thinks that that's unnecessary and that cutting rates at this point hurts savers in America more than it helps the economy.
Thanks for taking a look,
This article represents opinions of the authors and not those of their firm and are subject to change from time to time, and do not constitute a recommendation to purchase and sale any security nor to engage in any particular investment or legal strategy. The information contained here has been obtained from sources believed to be reliable but cannot be guaranteed for accuracy.
More slides available at JPM if interested