Markets Need Stronger Earnings and Rate Cut, Strategist Says

Subodh Kumar, chief investment strategist at Subodh Kumar Associates, told CNBC’s “Morning Call” that investors need to see increased corporate earnings and a Fed rate cut before putting more money into the equity markets.

“I don’t think either of them is going to happen,” Kumar said Friday. “Consensus hopes it will happen by year end, but I think that’s too soon.”

He said the market probably won’t move significantly higher until leadership comes from cyclicals and financials. Healthcare and consumer staples now offer steady cash flow and a safe haven to investors.

Stuart Freeman, chief equity strategist at A.G. Edwards, said investors need to see lower inflation and higher P/E multiples to re-ignite their passion for the equity markets--and that won’t happen soon.

“I think (Wall) Street is comfortable that earnings growth is going to be in single digits this year and maybe even below high single digits,” Freeman said. “(The market) is concerned about inflation numbers and what the Fed is looking at with respect to inflation.”