The second half of 2016 may produce better earnings, but fundamentals indicate the market is due for another dip before the first half is through, Federated chief equity strategist Phil Orlando said Tuesday.
Orlando told CNBC he sees stocks pulling back 5 to 8 percent in the next two months amid slowing economic growth, soft first-quarter earnings, and the potential for another collapse in crude prices.
Given that expectation, Federated has gone neutral on stocks with a roughly 60 percent allocation to equities, Orlando said.
"We've got a little more cash than normal, a little more bonds than normal. And the equities that we're investing in are more defensive — the lower beta, higher dividend yielding. So we're playing a little bit of defense right now," he told CNBC's "Squawk Box."