Jim Paulsen

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Last quote by Jim Paulsen

There's a lot of roadblocks to getting anything substantial passed. In the meantime, you've had a heck of a run in healthcare stocks. It's just a good time to take a little profits.
Mar 16 2017
We can learn a lot about a person if we know what types of things he or she talks about or comments on the most frequently. There are numerous topics with which Jim Paulsen is associated, including Federal Reserve, United States, and yield. Most recently, Jim Paulsen has been quoted saying: “The reason the Fed is hiking rates is because we're getting bombarded with good economic reports. If anything, the market's going to like the fact that the Fed is lifting rates and see it as a sign of how improved the economy and earnings momentum is. They're still looking at the Fed resonating more as good news than bad. It's the normalization of policy.” in the article What it means for markets that the Fed wants to raise interest rates now. An other article where Jim Paulsen has been quoted is Brace your portfolio: Stocks are set to pop and then drop, says strategist Jim Paulsen.
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Jim Paulsen quotes

I'm still bullish. I think we're going higher here. I'm watching rates. I think they're going to have to move a fair amount more. What I'm watching is the correlation between stocks and bonds, and it's still positive.

People were saying, Buy the election, sell the inaugural.' That was the buzz word and now it's doing just the opposite. I think there's still a ways to go. I think it has legs beyond Trump. There was a pronounced acceleration in the economy.

He's not likely to tweet out something that impacts the whole market. And what has been the case thus far is that it's usually been a buying opportunity. Tweet hits, the stock sells off. If anything, you buy it and it recovers. I think after a two-year pause in this recovery and in the market action, I think we're starting to restart it all again here, looking forward.

The economic reports, almost a daily event, seem to come out better than expected. It's sure hard for a market to go down when you get reports every day showing manufacturing coverage, showing consumer health and showing profit health. It's just difficult.

The best thing that President Trump has going for him is an unbelievable and unrelenting economic momentum here. There's been a lot of good stuff going on, including a reacceleration of U.S. growth and acceleration and around the globe with global growth – the United States with real median incomes rising and wages rising. You're ending global deflation that was so worrisome. You're lifting yields from zero all across the globe and normalizing monetary policy in the United States. We've got a great animal spirit juicer cocktail here.

I think the fundamentals that are going on are much more important than breaking the 20,000 barrier. Hopefully we'll do it soon and move on the next one.

I would maybe look in the equity market in international markets, emerging markets, as opposed to here. I might even look at adding some real assets to your portfolio for the balance of this recovery.

I just think a number of things are coming together including the fact that we've kind of got a more pro-biz president promising less regulation, and maybe lower corporate taxes, adding to the excitement.

I don't know if I'd make big changes on the basis of a new administration, but I do think you might consider some changes based on where we are in this recovery. Most of it had to do with really good improvement in the fundamentals here.

I suspect earnings are going to be pretty darn good, but the problem is expectations are going up too. Given the movement in some of these stock prices, you better hope they're outperforming expectations.

I'd be more worried about his tweets than his press conference.

I would think there would be a lot of questions as to what his agenda is, what he looks to accomplish in his first 100 days. It could have some short-term impact, in terms of what he chooses precisely. I don't think this is going to have much lasting impact, but it could create some volatility.

If you take job creation, plus wage creation, the combo package, we just had a job number equivalent to 250,000. It just didn't come in new jobs. It came in wages. That's one way to look at today's report. It's a solid report, and it's the new way we're headed in this recovery – more nominal wage gains than raw job creation.There just aren't enough bodies.

With wages going up like that, and you combine that with commodity strength, people are worried about the dollar, but there's a lot of pricing ... Nominal activity is lifting. It could be a big deal for sales.

We're not going to be able to do much more than the 150,000. We just don't have the people. Job growth always slows when you reach full employment.

As we go into next year we're going to find out the Fed is behind the curve, and wage inflation and consumer price inflation, even commodities are doing fairly well and I think the dollar is going to trade off on that. That could create a lot of portfolio readjustment because there are very few players expecting it.

We've experienced the first synchronized global stimulus around the globe in the last 18 months.

I think the Fed's going to raise multiple times next year, but I also think the dollar's going to come down.

The thing that's going to be taken away from this a few days from now is going to be the drop in the unemployment rate to 4.6 percent. Even the U6 number fell. It was a broad-based drop in the unemployment rate.

At the end of the day, we made another notch down in the unemployment rate and ultimately that's going to be leading to more pressure on wages and costs. With wages down today, that may not be the story today, but it will be in a week. A huge drop in unemployment … I think that's going to be the part that sticks.

In some ways, given the yield move, the market's doing pretty good in here. I still think the market probably goes higher. It's probably OK with a 2.5 yield but not if it keeps going up 10 basis points a day.

That's how far we've gone. That's like the good old days. I remember living through many, many payroll Fridays, where I was holding my breath that we had a weak jobs number. It seems like ancient history, but it's precisely what we fear for tomorrow. It is funny in a way, we're getting back there.

I think this is a huge success when you think about a world that for eight years has been hanging on a deflationary abyss. You've got to at least enjoy this given that we can get some inflation.

The problem with that scenario is while it could be a pretty good tonic for a short period of time, maybe even a few years, it could end badly.

Now we have a trend that is re-inflationary, upward-trending yields, and policy officials moving to the sidelines.

I'm really still suspect that the Trump train is going to be near as fast or dramatic as the market seems to suggest. I get the idea after spending this entire recovery with a culture that's been worried about the deflationary abyss ... for a while it could create more of a confidence boost than a negative force.

One thing that's been AWOL the entire recovery ... has been animal spirit behaviors, and I think that has a lot to do with lack of confidence in the future, and that has a lot to do with the deflationary abyss. That could be coupled with some behaviors that we just haven't seen that could really bring a good feel to the whole thing for a while.

I think those markets are underowned, they've underperformed for several years. … They're better relative values. They have younger earnings cycles than the more mature cycle in the United States. They're going to have longer policy support than the United States will.

As inflation expectations go north, that's a deterrent and a negative for the U.S. dollar.

There [have] been five major increases in the funds rates since the 1970s, and every one of them, when the Fed raised rates, the dollar came down.

I think the stock market is not far off fair valuation on that basis. You're also going to grow earnings. We all know earnings are going to be up a fair amount next year.

It's not like the only thing that's happening is rates have gone up. We went from sub 2 percent growth to more than 3 percent growth in the third quarter. … We've definitely had a pickup in economic and earnings momentum, which means we can withstand higher rates. People look at this as though the stock market has gone way up and rates have gone up. The stock market right now is about where it was three months ago.

One of the things that's happening of late is that we've had a rare thing where stocks have gone up and yields have gone up together, and that reflects to some extent, increasing confidence.

When we had negative earnings growth, that was a real challenge. Not only did rates not go up, they went down. In the third quarter, we now find out earnings growth is 3 to 5 percent, and up they went. Suddenly rates went from 1.70 to 2.25. That still might not bite much.

One of the things I found was of all the months when the 10-year yield increased, the stock market has gone up almost 10 percent per annum, as long as the earnings growth rate of the S&P exceeded the 10-year yield the trailing 12 months. However, if the rate went up when it exceeded the 12-month trailing growth rate of earnings, the S&P only appreciated 0.61 percent.

Because the character of this [economic] recovery is undergoing a transformation, investors should anticipate that leadership in the stock market will also probably be altered.

I think the big surprise over the next 12 months is that the dollar is going to come down and not up, even though the Fed's raising rates, because inflationary expectations are accelerating and we're going to get to a point where the Fed is behind the curve and that will be a negative for the U.S. dollar.

I do see this as a bit of an overreaction to what he can do and what can happen. The real catalyst is things are getting better. We had a massively outperforming earnings period. Things were turning. Raw industrial commodities were rising fairly substantially before the election.

I think the market's going to go higher, but short term I think it slows down a little bit.

Are we going to have a slow down over the next week or so? I think so … some of these moves are eye-popping.

I think that if we get into situation where it's a disputed election, that's really bad and that will certainly drag on, create a lot of uncertainty, raise the VIX.

Right now, I think there's growing evidence that there's not only a pickup in earnings momentum and growth momentum in the United States, but there's evidence of growing and broadening economic momentum picking up around the globe. I would say that that should focus investors in on the more economically sensitive, cyclical areas.

We've escalated fears, we've brought down prices, we've refreshed valuations a little bit, earnings are coming up, growth is starting to restate. I like that combo package of fear with better fundamentals, and I think I'd focus on that more than who wins the White House.

We're seeing the first synchronized bounce in growth abroad. I think we're going to have China back bouncing, I think we've got the U.K. doing better, we've got the Eurozone doing better.

Overall, growth in the United States may get a little boost just from the rest of the world.

I think the capability to boost capital spending is there if you boost corporate confidence. The capability to borrow and lend money is there, with repaired balance sheets, if we just have the confidence to do it.

There's a decent shot that this is another piece of an ongoing puzzle unfolding here. Things are turning up. Global economies are. Earnings are… It might be a new trend that lasts for a while here.

I think it's got a good chance of being over 3 percent. I think the initial response would be that both equities and yields go up.

One of the things that scares me in general about where we're at with interest rates is it seems everyone has accepted the lower-for-longer (position), including the Federal Reserve. When there's that big a consensus on anything, it always frightens me.

I've heard similar thought, that maybe this is all posturing by Yellen and a few others that don't want to be forced to move too fast or too aggressively to tighten.

So far, the earnings reports we've had suggest that we'll probably get a positive year-on-year growth rate, the first in a while here on this earnings quarter. I think it's the quarter that will label the upward turn or the return of positive earnings momentum again looking forward into next year.

We've got a healthy consumer yet, we've got a health job market, … capital goods reports are doing better, the manufacturing sector's been stabilizing, [and] I kind of think you might see better housing activity.

If Clinton looks like she's going to win, the market likes it. If Clinton's party looks like it wins, the market doesn't like it. That's one of the oddities we've got going. The election will create volatility short-term but I don't think it will matter over the next year, unless one party gets triple power.

I think we're breaking north. It's our next big move. It might have to be after the election.

I think we're going to maybe find out we are finally turning northward on earnings momentum.

There is a lot of refreshment that's going on here, not the least of which is a huge drop in the rate structure, the competitive interest against which we judge equities across the globe.

Since the 10-year Treasury yield is currently near a record low of above 1.65 percent, even extremely modest earnings growth may be sufficient to push the stock market higher as interest rates rise.

I'm sure if (the race) tightens up and I suspect it might, markets will react on the margin but I don't think it's going to be the driving force. I just think that no one gets tri-power, which seems unlikely, I don't think they can do much. They talk big but none of it can be implemented anyway.

I'm sure there could be some knee-jerk reaction if the debate is one-sided. I think more important is whether the economic data is going to pick up or not, and either way it goes, that is going to set the tone.

If it were to make an outsized move, dropping to 50 … then I think it would have an impact.

Since 1950, the stock market has done fine with rising yields provided the annual growth in earnings per share exceeds the 10-year Treasury yield. Indeed, historically, when yields have risen while earnings growth was above the 10-year yield, the S&P 500 increased by almost 10 percent per annum.

I think the market was ready for it [this month] and would have been fine if the Fed came through [long term].

I think the market can handle rate increases as long as earnings return.

Whether the Fed tightens or not, I think the markets are going to be fine. But I think if they do tighten, that would be the better thing. To show normalization would help.

It would extinguish a potential bubble in defensive stocks, without taking the whole market down.

The bigger story might be does the bond market break out as opposed to stocks? I'm not so sure a more hawkish Fed is necessarily bad for the financial markets.

I wish we had a Fed speak [volatility index]. I'm telling you it just spiked through the roof. It's all over the map. I'm confused about what they're trying to do. We've got people talking out of every side of their mouth. The Fed VIX is at its highest ever.

Some of the higher current readings have more do with we're still recovering from the oil and commodity collapse, which is going to reverse somewhat.

If you look at global surprise indices, they are up in most places across the globe including the United States.

The surprise index measures economic reports from around the globe that are coming out better than expected. When it goes up, it suggests that economic momentum is going up.

We think the global economic recovery may be in the early stages of a synchronized bounce. I think there's evidence of that already happening.

Globally stocks are going higher, and now international markets are starting to outperform the U.S., suggesting this is more of a global fundamental pick-up.

An improvement in economic momentum is also strongly suggested by rising stock markets.

You've always had people who accepted the lower-for-longer argument. The biggest thing that's happened in the last 90 days is the Fed has accepted it.

What that means is corporations in this country are paying a resource more of their precious sales dollar – more and more and more – and they're getting less and less and less. I don't think that's probably true. I think one of those things are misstated.

If productivity is stronger, then so is growth, which might explain why profits have done so well, why auto sales are at record highs, why we've returned to full employment.

It might explain a lot of things that are tough to explain if we're really only growing sub-2 percent.

There's a lot of market messages saying there's a global market revival. I would prepare for that by going offshore and overweighting those markets.

I think we might be en route to a global synchronized bounce at a time when a lot of people are concerned about growth weakening.

It has raised pessimism in the shadow of Brexit. I still think the economy is still growing in that 2 to 2.5 percent range.

You're seeing a sector rotation that coincided with the earnings season, but more importantly it's the better-than-expected economic reports. We're still going to have some bad reports, but we're going to have a sense the tide has turned. I think there will be numbers but we're going to see better commentary too.

What some of the economic surprises are telling us is that you had momentum in the second half of the quarter coming into this quarter. What that tends to mean is the quarter (earnings) outperform expectations. I do think the better economic reports and the better economic momentum bodes well for an earnings season that outpaces expectations.

The corollary is investors are anticipating an upturn in earnings as well. I think that the broadness of this rally reflects that more and more companies are seeing positive earnings momentum.

I think we're going to have a pretty big cascade of change in the rest of this bull market. Up until now, across the globe, it's been led by three main themes: large cap, United States and consumer-oriented stocks. I think going forward, all three of those leaderships are in the process of changing.

I think economic momentum is returning. The Citigroup index of economic surprises has been signaling improvement.

Economic surprise indices have been steadily rising. There have been good reports this week leading up to Friday's highly anticipated jobs report.

It might be a serious political problem, but the markets are rightly finding it's not going to be a major economic and financial hit. You can listen to the public rhetoric and you can listen to Mr. Market. Which side do you want to be on? I think the market message will be more accurate.

We've worried a lot about the euro zone through this recovery. Whenever the fear peaks, the right thing to do: buy.

I don't think we're going to escape this until Thursday. We're just going to be tied to those anxieties going up or down between now and the Thursday vote.

We've never tried to treat confidence, and I don't know that we shouldn't at least give it a stab.

I think it is high time that the Federal Reserve starts to normalize policy. We've tried this for seven years; let's try something new. I really think markets are going to be OK with this.

The cyclical sectors on the stock market are doing better, so there's a bullish undertone to the idea that the Fed will finally start to normalize interest rates. I think it is high time that the Federal Reserve starts to normalize policy. We've tried this for seven years, let's try something new. If the Fed shows confidence the private sector might do the same.

The stock market rallied because we got evidence that we're not recessing and we were pricing in a recession. But ultimately, if the U.S. economy is OK, rates are going to be an issue.

Eventually, stock investors may again become troubled by the speed and frequency of potential Fed interest rate hikes. Initially though, better economic reports should continue to calm recession fears and bolster Wall Street earnings forecasts. However, given that the missing 'catalyst' for the stock market has seemingly arrived – better economic growth – perhaps the stock market is headed for another challenge of the all-time highs.

I don't think there are high odds that we're going to fall into a recession this year, but what if we did?

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