This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking asset allocation with Phil Camporeale, portfolio manager with JPMorgan Asset Management.
Fed Chair Jay Powell has been “unbelievably consistent” in his dovishness amid the panic, says Camporeale, expecting no imminent policy - or even communication - changes out of the central bank despite what’s been a raft of strong economic prints of late, and what’s likely to be whopping 9% GDP growth in Q2.
Wage pressure will be necessary to make perky inflation numbers anything more than transitory, says Camporeale, but despite some impressive job gains, the unemployment rate remains elevated and labor force participation rate under serious pressure. With all that unused labor sidelined, it’s hard to imagine the sort of wage-push inflation that might put the Fed on alert.
It adds up to Camporeale and team remaining overweight stocks vs. fixed income, overweight cyclicals like financials (XLF), industrials (XLI), and energy (XLE) vs. big-cap tech, overweight cyclical economies like the U.S., Europe, and Japan, vs. tech-dominated emerging markets, and equal-weighted market indexes vs. cap-weighted indexes.
There’s plenty more, including what areas of fixed income Camporeale is allocating money to, why he’s not sold on Bitcoin as an appropriate diversifier for his portfolios, and the lesson Jay Powell learned (and won’t forget) from late 2018.
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