Stocks were lower on Wednesday amid weakness in techs and retailers. Barry Knapp, head of US portfolio strategy at Barclays, shared his market outlook.
“We’re dealing with this fiscal tightening uncertainty and that whole debate is going to build into the November elections,” Knapp told CNBC.
“But we haven’t even really begun that debate, so until that gets defined, I suspect we’re going to be stuck in a range.”
However, Knapp said he expects to see the markets rally throughout the earnings season because it “mitigates some of the double-dip risks.”
“But we will have another struggle with what that fiscal tightening is going to look like—it probably sets us up for another correction in the fall and maybe a fourth quarter rally, depending on the outcome of the elections,” he cautioned.
In addition, Knapp warned that if the dollar continues to be under pressure, there will be another correction in equities.
“One of the things that have happened in the last few weeks is that the euro started to rally because of uncertainty being lifted with respect to the fiscal tightening outlook,” he explained. "But it’s hard to see how we won’t have billions and trillions of dollars in deficit for the next 10 years so if the market gets concerned about that. And if the dollar comes under an undue amount of pressure, there will again be likely a correction in the equities."
Scorecard—What He Said:
- Knapp's Previous Appearance on CNBC (Jul. 8, 2010)
Read an Opposing View:
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CNBC Data Pages:
Major Earnings to Come:
No immediate information was available for Knapp or his firm.