As Wall Street copes with a disappointing September kickoff, Oppenheimer’s John Stoltzfus is actively putting money to work.
The market bull believes trade frictions between the U.S. and China will dramatically ease within months and pave the way for a significant market rally.
“Machismo seems to be keeping the deal from being done,” Oppenheimer Asset Management’s chief investment strategist told CNBC’s “Futures Now ” on Tuesday. “We do think, however, there would likely be a deal before February.”
Why February? That’s when presidential primary season begins.
“Perhaps, it would cause an unconventional presidency to be a little bit more diplomatic in bringing about an agreement,” Stoltzfus said.
In the meantime, Wall Street remains jittery over trade war fallout. During the Labor Day weekend, the U.S. implemented a new round of tariffs against China and the major stock indexes turned negative Tuesday.
The uncertainty could push stocks 4% to 6% lower this month, according to Stoltzfus. If the S&P 500 falls another 6%, it would put the index in textbook correction territory.
But it’s not softening his bullish stance. Stoltzfus is using pullbacks as opportunities to buy cyclicals including industrials and financials.
“We are long investors in my particular area. We manage money for people who have investment goals: three, five, seven, 10 years out,” he said.
In a recent note, Stoltzfus wrote: “We remain believers that cooler heads will ultimately prevail leading to some kind of resolution that will halt trade war hostilities. … The alternative is simply too impractical and too costly for both sides and their trading partners across the world.”
He also sees a deal ultimately pushing up Treasury yields, which are sitting at multiyear lows.
“We [will] see expectations that yields will rise. The Fed will get back to normalization policy,” said Stoltzfus, who predicts that U.S. growth projections will ramp up and that talk on the Street will shift toward inflation.
“If we get a trade deal, I think the expectations do a 180 degree turn,” Stoltzfus said.