Earnings stumbled in the first half of the year but Burt White, chief investment officer at LPL Financial, sees several reasons why profits will rebound for the second half of 2015.
Despite the Fed cutting its economic outlook, White believes history will repeat itself, “this played out last year, a really bad winter in the first quarter of 2014 only followed up with very strong 3% GDP growth in the second half that fueled a great rally in the market, we think the same is playing out here…better growth in the second half.”
The market is anticipating the Fed’s first rate hike in nearly a decade. Many traders are betting it will come later this year. “The big thing to remember about a rate hike is it’s not as bad for equities as people think," advised White. “If you look at the last nine times the Fed has raised rates, in the year after they raised rates, eight of those nine times, the market’s been positive by almost double digits.”
White maintains that the economy is improving and that the environment is favorable for large cap U.S. stocks, cyclical growth sectors, and both emerging and developed international markets.
For the long term, the 'rise of Millennials' is one of the themes White said investors should consider, “we think of Millennials as bratty, snotty-nosed little kids and the reality is millennials are growing up quickly. By the next 10 years, 70% of the working age population will be Millennials.”
The investment strategist believes it’s important for the markets to understand the viewpoints of this demographic as they “begin to showcase and become more of a bigger presence as a they relate to the workforce as well as the spending population.”
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