‘There are long-term benefits of cryptos’: Strategist

Jordan Jackson, JPMorgan Global Market Strategist, joins Yahoo Finance Live to discuss the Fed’s role in the U.S. recovery, preview on Fed Chair Powell’s testimony, and Bitcoin’s volatility.

Video transcript

- I want to stick with the markets now and the Fed and bring in Jordan Jackson, global market strategist at JPMorgan. Jordan, thanks for being here today. So are you expecting Fed Chair Powell's testimony today to be market-moving? What are you expecting from him?

JORDAN JACKSON: I don't think it will be too market-moving. I do expect him to potentially dial back some of the hawkish tones that were set at the meeting last week. And he tried to do this in the Q&A last week, when he talked about sort of these two interest rate hikes that are now penciled in for 2023. He mentioned that these stock plots aren't a definitive outlook on policy rates.

And so I think what that's him also saying is that, look, these are different Fed officials that have different views, or different outlooks on what to expect for rates going forward. But it's not necessarily-- you shouldn't pencil in two specific rate hikes in 2023.

I do also think it's interesting to see that you saw more officials project some rate hike in 2022 as well. I think broadly speaking, he's going to dial that back a little bit and suggest that, look, we're going to remain data-driven over the course of the next 18 to 24 months. We still don't know how things are necessarily going to shake out. But what we do know is that inflation is picking up today. Global growth in the US is picking up and is likely to be north of 10% here in the second quarter.

And so I do think that, while markets are expecting some bit of normalization in the years ahead, I think Powell is still going to suggest that policy is going to have to remain accommodative for the foreseeable future.

- And Jordan, to that point about inflation, I think so many people have just repeatedly heard that phrase, that inflation's going to be transitory. Transitory, transitory, meaning temporary. It's not going to last forever. But how transitory is transitory, really? I mean, how long is there the expectation that these inflation numbers are going to continue to run hot?

JORDAN JACKSON: Well, I expect inflation to run between 3% to 3 and 1/2% through the balance of the year. We have to recognize that the progress on vaccination has been very good. Things are opening back up across a bunch of major cities across the United States. And so I think that folks are ready to get back out there and begin to continue spending, on particularly services. There are services that we've missed so much over the past year and some change.

So I think that demand side of the equation is going to keep inflation a bit hot. But we have to remember that-- look, I probably have a few more movies that I want to see, restaurants that I want to go visit. But then you know, sometime next year, my consumption of those services are pretty much going to normalize. And I think that's a story that's going to be persistent throughout the broader economy.

So I think inflation will run a bit hot here, but I'm in broad agreement with the Fed that it'll be start to begin to cool in 2022. Also, as those supply bottlenecks begin to work themselves out as well.

- We have to talk crypto with you. It seems like we're doing that with every one of our guests these days, Jordan. And a very volatile day for Bitcoin. You might say nothing new if you've decided to invest in that space. But where were you when it comes to cryptocurrencies? Do you hold any there? And what are you hearing from clients?

JORDAN JACKSON: Well, what I think clients should always ask themselves before even looking at cryptocurrencies is what the role that cryptos will play in my portfolio. If I'm a long-term holder or believer in cryptocurrencies, and I'm willing to stomach that level of volatility, I think crypto should have a small piece of the portfolio. But if I'm someone who's trying to day-trade this market or get in and make big gains, then that's probably going to be a painful experience for most folks.

So I think that there are long-term benefits of cryptos. I think the blockchain technology that they exist on is very, very promising. But I do think that this is a long-term play. Those that are trying to time the market are probably in for a lot more pain than gain.

- Jordan, it's a very good reminder. Because I think that the current environment that we are in right now, so many folks are really looking for a lot of those quick gains, especially after we saw GameStop, for example, absolutely sore. And what we saw with some of these cryptocurrencies, including Dogecoin. So I hear what you're saying about cryptocurrency, hold it for the long term, putting cryptos to the side. Where else are you seeing opportunity right now in this market?

JORDAN JACKSON: Well, we're still seeing opportunities in some of the cyclical value parts of the market. Call it industrials, financials, materials. A little bit less on the energy call, given the run-up that we've seen on oil prices so far.

And so in an environment in which we still think that the yields are going to move higher. We still believe that over the balance of the year, we're looking at a steepening yield curve. And what we tend to see in those environments that cyclicals tend to outperform defensive. And so we're still seeing a bit of opportunity in the value side. Again, this trade, this rotation trade started in earnest, I would say, November of last year, but I still think has some more legs to run.

- All right. Jordan Jackson, global market strategist at JPMorgan. Thanks so much for being with us today.