ADP National Employment Report showed private payroll growth slowed in May, signaling a cooling labor market ahead of Friday's jobs report. GDS Wealth Management Chief Investment Officer Glen Smith joins Market Domination to discuss the print and what it means for the Federal Reserve's next interest rate decision.
"I think the market is softening a bit as evidenced by the ten-year Treasury coming down, so I think there's going to be some opportunities here going forward in terms of volatility," Smith explains. As inflation continues to be a stressor, he recommends investing in equities as "the best opportunity to beat that inflation number."
He points to financials and energy as two attractive sectors to invest in. When it comes to financials, Smith calls JPMorgan Chase (JPM) the "best breed of bank," as the net interest margin is attractive and lending should pick up when rates fall. On the energy side, he highlights Halliburton (HAL) as a great investment opportunity despite its underperformance. He believes that investors should buy the dip as the company has strong financials and currently sits as one of the largest oil service providers in the world.
As inflation continues to put pressure on the economy, Smith believes a rate cut could come in September. Until then, he believes "this is a great time to look at your portfolio. Make sure you're diversified. A lot of allocations have kind of gotten out of whack with Magnificent Seven, everything going on. Make sure you're not over-concentrated in any one sector or stock that might be a little bit speculative at this point."
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