In his latest investment-strategy outlook, Jason Pride of the investment firm Glenmede notes that the U.S. is in the midst of a “soft patch, with Fed stimulus about to end and politicians still at an impasse.” His portfolio advice? “Emphasize relative value opportunities within asset classes,” he wrote in his weekly report, released early Monday.
“Last week’s employment report underlined these concerns [over the coming end of QE2], throwing doubt at the economy’s most important engine for sustainable expansion,” Pride explained. “The slow-down could be temporary, but the risk of a more material slow-down has increased.”
Meanwhile, the CFA says that emerging-market monetary tightening may start to slow as inflationary pressures diminish. In Europe, Greece appears positioned to receive an expanded loan package from the IMF/EU, “but the specific details, particularly as to how the private sector lenders ‘share the burden,’ ” he added.
Europe’s core remains in very strong shape, according to Pride, and inflation may be backing off — but the ECB still looks hawkish. Spain does not appear to have been badly shaken by recent events surrounding Greece, he says.
As for the U.S. debt ceiling, the Treasury is employing evasive actions to avoid breaching that limit before August 2. “The likely outcome: a compromise to increase the debt ceiling combined with near-term cuts, future deficit targets and triggers for further automatic spending limits and tax increases. This would not be the long-term solution, but would buy time and embed incentives to follow through,” Pride explained.