Inflation: There’s a ‘teeter-totter’ between higher rates and a steady economy, strategist says
Inflation is a key focus of market watchers after the House of Representatives passed the Build Back Better bill, a sweeping spending measure now headed to the Senate.
"The economy is going to keep going forward, we're not going to see much of a slowdown there. Inflation is going to keep heading up," Barry James, portfolio manager at James Investment Research Portfolio told Yahoo Finance Live.
"We kind of have this teeter-totter between perhaps higher rates and a steady economy and that playing through the entire investment world," said the strategist.
In the current inflationary environment, James recommends favoring companies that have pricing power with resiliency to impacts on operating margins.
"It does look like inflation is with us for a little while, although we are seeing an energy pullback, which could ease some of those worries," said James.
As the probability of a Federal Reserve rate hike next year increases, James suggests leaning towards cyclical stocks.
"I do think that's the next wave, once we get things under control a little bit in terms of COVID and the like; smaller cap, more value oriented names and and more cyclical names," said James.
"It's important that you don't ride things that have been on a parabolic run, and just keep hanging on to them," he added. It's wise to trim names which have been on tear, and take some profits off the table.
"Nvidia (NVDA) for instance, we own it in the Golden Rainbow Fund, but we're trimming some back," said James.
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