(Yahoo!Finance) - Jordan Jackson, J.P. Morgan Asset Management Global Market Strategist, joins Yahoo Finance Live to discuss how markets are faring amid the pandemic and what a potential government shutdown means for the stock market.
BRIAN SOZZI: But first, let's start on the markets here as we head into the week. And Jordan Jackson is a global market strategist over at JP Morgan Asset Management and joins us now. Jordan, good to see you again here.
Again, we've been talking all morning long and there has been a lot thrown onto the plate of investors this week. What's your current market thinking?
JORDAN JACKSON: Yeah, it seems-- looking at the market moves today, it seems like the markets are still sort of digesting Evergrande, they're still digesting the Fed action that we saw on Wednesday. And so it's not surprising that we're getting a little bit of market wobbles or volatility here. And we expect that to continue. This is something that we have been calling for for quite some time.
Obviously, you still have some congressional hurdles that still need to be worked out as well. And so a lot of things happening in the background I think markets are digesting. Still think of path of least resistance though as you move through the course of the year and into next year is higher.
We still have very, very strong and robust earnings coming through. Those earnings numbers continue to gradually be moved higher as we move into 2022, those estimates. And so I think, again, as we move past some of these volatility-inducing events in the short-term, markets can start to grind higher.
- You know, I wonder, Jordan, because all of the risks that we talk about are risks that are pretty well understood by the markets. Do you think that there's anything though that is not being as closely watched that could present a risk to that scenario? Or do you think that everything is pretty-- we're sort of in the process of getting it all priced in here?
JORDAN JACKSON: You know, I think some of the Congressional hurdles are-- you know, we're potentially gonna government shutdown as of Friday of next week. So I think there are still some risks. You know, we-- obviously, the $3.5 trillion continues to be held up in the Senate. And so, you know, I think these could be some volatility-inducing events as well.
I do recognize that there are some worries around China, and specifically, within the property market. I think the contagion risk to the US is relatively muted. And again, I think really the supportive backdrop of still easy monetary policy, right? You know, tapering is not tightening although we do expect tapering to happen at the end of this year.
But still seeing stimulus come through through the first half of next year. Obviously, additional baseline cases, additional fiscal spending will be coming through as well. And so I do think that markets are sort of looking forward and recognizing that once we get past some of these short-term risks, does seem to be a blue skies.
BRIAN SOZZI: Jordan, for those investors who are growing concern about a potential government shutdown-- and they're out there-- what's your advice to them?
JORDAN JACKSON: Well, historically, we've seen that government shutdowns tend to be short-lived. We also know that for those nonessential federal employees, they do get Furlough pay as well. And so recognizing that, right?
If it lasts more than 30 days, it's certainly going to have a bigger impact on the economy. But generally speaking, these shutdowns tend to be short-lived and markets, while they may correct in the short-term, they do sort of continue to grind higher. So I think it is certainly a risk in terms of a short-term mini correction there. But again, with all the liquidity that's out there, I think any sort of a blip in the markets will be short-lived.
- And Jordan, what are you telling clients in terms of strategy right now? Sort of sector strategy. Brian, a few minutes ago, was illustrating for us that, for example, industrials and some of the other cyclicals have been sort of beat down. Are you advising clients to get into those areas or are there other areas you prefer?
JORDAN JACKSON: We are. And I think there's-- it's really more so about striking a balance, right? We recognize that sort of the growthier names have actually been played at-- playing a bit more defense. As you see, risks of the Delta variant sort of slowing the outlook. You know, growth kind of tends to do well on days where we get sort of those growth concerns.
But I still do think that that sort of cyclical value trade still has some room to run. Those industrials, those materials, they've obviously, as Brian highlighted, have gotten beat up more recently. But I still think there are some room for them to run from today.
So yes, we are advising clients to consider these sectors. But really striking a balance between the growthier year side as well as the cyclical value parts of the market.
BRIAN SOZZI: All right, we'll leave it there. Jordan Jackson, JP Morgan Asset Management global market strategist. Always good to see you. Have a great weekend.
By Brian Sozzi
September 24, 2021
