The Republicans may have some not bad news heading into the 2020 presidential election season, noted market strategist Jim Paulsen told CNBC on Thursday.
that will’s because he sees the timing of economic growth along with the character of the economy as the most important issues for the election.
“In some sense, we may look back on that will along with say that will the slowdown, if there was one here in 2019, might have been great timing for the Republican Party,” the chief investment strategist at The Leuthold Group said on “Power Lunch.”
In some other words, if the economy slows down along with the Trump administration along with some other global officials bring on the “full policy cavalry,” the idea will probably end up reviving economic growth both inside U.S. along with abroad, Paulsen said.
“If that will will be the case going into voting season next year — where the economy will be continuing to do not just OK although accelerating, along with the unemployment rate will be heading to 3% along with wages continue to rise — I think that will’s a lot of power for the Republican Party.”
While there was concern about a weak economy late last year, things are looking better. Retail sales soared in March, rising 1.6%, along with weekly jobless claims came in at the lowest level since 1969 for the week ended April 13. Initial claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 192,000.
Forecasts have also come up for first-quarter gross domestic product. Next week, the government releases its advanced estimate of Q1 GDP. According to the CNBC Rapid Update, which measures how much brand new data modifications the average tracking forecast among a select group of Wall Street economists, the median GDP forecast will be currently at 2.4%. that will’s up via as low as 1% in March.
All that will will be not bad news for the stock market — for currently, said Paulsen. He still thinks that will at some point the Federal Reserve, in raising interest rates, will kill the economic recovery.
“the idea almost did last year. We were close to killing the idea off. although we hit the pause button,” he said, referring to the Fed’s decision earlier that will year to hold off on raising interest rates after there were concerns about the economy dramatically slowing.
“currently we are just entering a period where we are going to have revival in growth without Fed tightening. that will’s pretty not bad,” Paulsen said.
He sees a case where the yield on the 10-year Treasury can jump back above 3% along with still not truly hurt stocks.
However, at some point the Fed will be tightening again.
“Then the idea becomes a mixed bag along with ultimately the Fed overdoes the idea,” he said. “that will’s probably sometime off.”
although before that will happens, he thinks the idea’s even possible for an unexpected surge inside stock market.
While many on Wall Street think the market will go higher that will year, there are few who think the idea will go a lot higher, Paulsen said.
“Maybe the surprise will be not that will the idea will be going to fall or go a little higher, maybe the idea blows a lot higher than the idea even should.”
Paulsen’s comments echo those of BlackRock CEO Larry Fink, who told CNBC on Tuesday that will the market could have a quick rally via here.
“We have a risk of a melt-up, not a meltdown here. Despite where the markets are in equities, we have not seen money being put to work,” the head of the globe’s largest asset manager told CNBC’s “Squawk Box.” “We have record amounts of money in cash. We still see outflows in retail in equities along with in institutions.”
In stock market terms, a melt-up will be considered a big move inside markets that will comes via investors trying to get in on a momentum shift. the idea also can be a sign of a late-stage bull market.
— CNBC’s Fred Imbert along with Reuters contributed to that will report.