‘We like equities broadly’: JPM Private Bank
Equities as an asset class will likely outperform fixed-income investments, JPMorgan Private Bank Chief Strategist Kate Moore said Friday.
"We're not looking for blockbuster earnings in the third quarter," she said, adding that her focus was going to be in fourth-quarter earnings and guidance. "We want to hear companies 2014 cap ex budgets and plans. I don't know that we get that during this reporting season, largely because of shenanigans in D.C."
On CNBC's "Fast Money," Moore said that she wasn't expecting Congress to cause a government shutdown again or threaten to default on U.S. debt.
"We don't think we're going to get the same kind of brinkmanship we had in the last few weeks, largely because of the election year next year," she said.
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Moore said that sector rotation was healthy for the market, something that had happened a couple of times already in 2013.
"Our expectation is that we need to see kind of broad-based earnings to get that next leg higher," she said.
Moore also said that she would like to see more capital expenditures from businesses, technology spending and higher industrial activity, factors that had begun to pick up ahead of the Federal Reserve's meeting.
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"We want to see businesses feel more comfortable spending. I don't know that they're going to communicate that to us in the near-term, even if they need to in order to continue to grow," she said.
Her top sector picks were financials, technology and health care.
"But we frankly like equities broadly," she said.
Despite concerns about valuations becoming too rich, Moore said, "We would say you can't think about equities relative to equities. You'd have to think about equities relative to fixed income and the alternatives we have in the investment universe."
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Tech valuations, she noted, weren't as cheap as they had been six months ago, making it more of a stock-picking market. But the overall outlook appeared positive.
"What I would say is we are constructive on U.S. and global growth in 2014 and on," she said. "We think rates are going to continue to rise, albeit not at the pace we saw over the last five to six months. And if you have that expectation that we can hit 3-handle on the 10-year, then you have to believe that the returns with fixed income are going to be much, much harder to get."
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Moore said that equities could outperform fixed income if it were to see earnings growth of 5 to 6 percent, 2 percent dividend field and "maybe another half-point of multiple expansion in 2014."
Trader disclosure: On Oct. 18, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long MSFT; Guy Adami is long AGU; Guy Adami is long NUE; Guy Adami is long BTU; Guy Adami's wife, Linda Snow, works at Merck; Brian Kelly is long natural gas; Brian Kelly is long Nikkei; Brian Kelly is long US Dollar; Brian Kelly is short Mexican Dollar ; Josh Brown is long GOOG.