JPMorgan Asset Management’s David Kelly thinks investors ought to focus on value stocks as the Federal Reserve continues to raise rates, Bloomberg reported Monday (Aug. 29).
The chief global strategist said investors should not look short-term as Fed Chair Jerome Powell has sent equity markets spiraling after saying the central bank wants to keep trying to tame inflation by raising rates, even if that means an economic downturn.
“The economy has got one foot into a recession and the other on the banana peel now,” Kelly said, per Bloomberg.
Kelly said investors should overweight U.S. and international value, along with stocks with lower price-to-earnings ratio.
Kelly said investors should steer clear of large cap tech stocks and bitcoin, and should sell crypto. He said there’s likely to be more volatility in the future, but that the economy could even out by the end of 2023.
The direction Powell is going went against the hopes that there could be a dovish pivot, the report said. Kelly said the real question right now is “how much damage the Fed wants to inflict to this economy?”
There has been much written about the potential crises to come with the economy, with PYMNTS reporting that 13% of Americans spent more than they earned since the beginning of the year.
Read more: A ‘Tale of Two Halves’ as Paycheck-to-Paycheck Consumers Feel Added Financial Strain
PYMNTS and LendingClub collaborated on a report called “New Reality Check: The Paycheck-To-Paycheck Report: The Consumer Savings Edition,” which the report says there was also a 9% increase in the share of those earning over $100,000 and living paycheck to paycheck.
“A nine-percentage point jump is pretty significant in a month,” LendingClub Financial Health Officer Anuj Nayar said in an interview with PYMNTS.
