Financial media guru bullish on economy
LATHAM, N.Y. » Higher interest rates, rising fuel prices, controversial trade policies and midterm congressional elections could have significant economic impacts as 2018 unfolds.
But a financial media guru says the current old bull market, the second longest since World War II, has at least another two years to go.
Ryan Detrick, who appears regularly on outlets such as MSNBC, CNBC and Bloomberg Television, was keynote speaker during a CapCom Financial Services LLC gathering with more than 200 people on hand at the Century House, in Latham.
“Do bull markets die of old age or do they die of excesses?” said Detrick, vice president and senior market analyst for Boston-based LPL Financial, the nation’s largest independent broker- dealer. “We think they die of excesses whether it be overspending, over-leveraging or overconfidence. We’re not seeing the same ‘overs’ or excesses that we’ve seen in previous economic peaks. So we think we can have another year or two, maybe even three years, before we finally have a recession.”
All signals point in this direction, he said.
For example, four percent year-to-year wage growth typically indicates a recession’s start, he said.
“We can’t even get three per--
cent,” Detrick said.
Under a worse- case scenario, tariffs with potential to spark a trade war with China, could have an $81.5 billion negative impact. But China would be selling U.S. debt if it was really at odds with Trump administration trade policies, he said.
“We’re not seeing that,” he said. “Also, there’s still $800 billion coming from the fiscal stimulus we’ve seen such as repatriation ($500B), tax cuts ($200B) and government spending
($100B). This should dwarf those tariff concerns.”
On another front, interest rates have already gone up once this year and most people expect two more increases, Detrick said.
“If inflation keeps creeping up you could have more interest rate hikes,” he said. “But when the Fed does interest rate hikes before the market peaks, there are an average of 17 hikes before recession comes. We’ve only had six so far this cycle, so in our opinion there’s still room for interest rates hikes, for inflation to go up a little bit.”
The first of those six increases was two years ago. Using this indicator, “we’re only at the midpoint of economic expansion,” Detrick said.
Also, market volatility is perfectly normal during mid-term congressional election years. Stability and growth typically return once races are decided, he said.
“We’ve had two 10 percent corrections in the S&P 500 already this year,” Detrick said. “We wouldn’t be surprised at all if it was up 20-25 percent next year. The economy still looks good. We’re not seeing some of the warning signs we normally see. There’s very little chance of recession in the next 12-18 months.”
Locally, one of the Capital Region’s biggest economic concerns is a serious labor shortage. Employers across the board in manufacturing, healthcare, and hospitality and tourism are having difficulty finding enough people to fill jobs.
But in some cases, such as the tech sector, it’s sim- ply a matter of time before area residents become trained for such opportunities, said John Shartrand, CapCom chief investment officer.
“There’s a lag, a gap between the jobs available today and what people are educated for,” he said. “The great thing about the Capital Region is we may be 1218 months behind the curve, but we’ll get ahead of it because of our university and educational system. For example, Hudson Valley Community College just broke ground on a new manufacturing building, which will allow them train people relatively quickly.”
“It’s just a matter of how well we can adjust and prepare people for the new jobs available,” he said.