Tags: jim paulsen | bull | stock | market | inflation

Strategist Jim Paulsen: 'Bull Market Could Continue Forever'


By    |   Friday, 04 August 2017 11:38 AM EDT

Economic guru Jim Paulsen predicts that the bull stock market can continue to charge endlessly into the future.

That is, until when and if inflation heats up.

The stock market "has an awful good gig going," the Leuthold Chief Investment Strategist told CNBC.

"We've got a fully employed economy, rising real wages. We restarted the corporate earnings cycle. We've got strong confidence among business and consumers," he said.

"The kick is we can do all of this without aggravating inflation and interest rates," he said. "If that's going to continue, I think the bull market could continue to forever," he explained.

To be sure, stocks on Wall Street opened higher Friday and the Dow Jones industrial average was on track to close higher for the ninth straight day after data showed U.S. employers hired more workers than expected in July.

"Ultimately the bull market does continue until we aggravate some inflation, and until we have to raise bond yields and interest rates some more," Paulsen said.

"I think that's going to happen eventually, but it doesn't look like it's going to happen anytime soon. So I think the bull probably continues through the end of this year," he said.

Meanwhile, the Labor Department report showed nonfarm payrolls increased by 209,000 jobs last month, above the 183,000 rise expected by economists polled by Reuters.

June's employment gain was revised up to 231,000 from the previously reported 222,000.

Average hourly earnings rose 0.3 percent after gaining 0.2 percent in June, while the unemployment rate fell to 4.3 percent.

The strong jobs report is likely to clear the way for the Federal Reserve to announce a plan to start shrinking its $4.5 trillion bond portfolio in September, and could strengthen its case to raise rates for the third time this year in December.

Chances of a rate hike by the end of the year increased to 50 percent from 46 percent after the release of the data, according to CME Group's FedWatch tool.

"It's encouraging to see average hourly earnings come in line after falling the previous month," said Eric Wiegand, senior portfolio manager at U.S. Bank Private Client Reserve.

"I do think it (validates the Fed). Our expectations continue to be that we'll see a measured, moderate, deliberate reduction of the balance sheet and we're likely to see one more rate hike in the latter part of the year," he told Reuters.

Meanwhile, the solid job-market gains should at least keep household spending humming in the third quarter as the economy struggles to break out of a 2 percent growth pattern of the last several years. The July figures may also give a cleaner read on labor-market health after unseasonal weather and fluctuations in end-of-school year hiring muddied the picture over the past few months, Bloomberg explained.

And while tepid broader inflation has been a challenge for Federal Reserve policy makers, the broader thrust of the employment report is likely to keep the central bank on course. Officials have signaled they’re ready to move forward with reducing the Fed’s $4.5 trillion balance sheet and potentially increasing interest rates once more this year.

While President Donald Trump has been praising the pace of job gains since he took office in January, the average figure of 179,000 over the past six months remains below the typical 187,000 per month in 2016.

His goal of adding 25 million jobs over 10 years would require additions of 208,000 a month. “Excellent Jobs Numbers just released - and I have only just begun,” the president tweeted about 15 minutes after the report.

“It ticks off all the right boxes,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets. The report shows “an unemployment rate that improves, hourly earnings that move in the right direction, and a wage pie which moves in the right direction.”

For an economy growing at a pace of 2 percent to 2.5 percent, “this report fits that narrative perfectly,” he said.

(Newsmax wires services contributed to this report).

© 2024 Newsmax Finance. All rights reserved.

Economic guru Jim Paulsen predicts that the bull stock market can continue to charge endlessly into the future.
jim paulsen, bull, stock, market, inflation
Friday, 04 August 2017 11:38 AM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
Get Newsmax Text Alerts

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved
© Newsmax Media, Inc.
All Rights Reserved