Job Market, Not High Gas Prices, Could Trip the Bull

Stuart Schweitzer, global markets strategist at JP Morgan Asset & Wealth Management, told CNBC’s “Power Lunch” that jobs –- not high prices at the gas pump –- could become the major markets-shaping issue in the next few months.

“You can fast forward two or three months from now as we enter the summer driving season and I think the central issue is going to be jobs,” Schweitzer said. “Between now and then, we’re going to see construction jobs weaken at lot. If energy prices stay high or go higher, we’ll have a double-barreled problem.”

Schweitzer said housing starts are down to about 2001 levels, but employment in the sector is 25% to 30% higher than it was six years ago.

“That’s got to correct,” he said.

Schweitzer said he expects the Federal Reserve to cut interest rates, especially if job growth slows significantly in the near future.

Simeon Hyman, equity strategist for Lehman Brothers Private Investment Management, offered a different view.

“What we’ve seen on the corporate side is muted capital expenditure,” Hyman said. “But we’ve also seen wage pressure. So, I think there’s a bit of a move from fixed to variable cost, which is going to help keep the job market fairly robust going into this part of the cycle.”