This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management.

Among the topics discussed:

While the Fed has begun to taper and may push through a couple of rate hikes next year, Schutte expects the central bank to be very patient about tightening policy. He’s in the “transitory” camp on inflation, noting plenty of slack in the labor market as evidenced by a labor force participation rate that remains quite low.

Given the above combined with growing corporate earnings and a 10-year yield in the 1.50% area, Schutte continues to see stocks as the place to invest.

The “market” may be expensive in some areas, says Schutte, but it depends where you look. The S&P Pure Growth Index trades at 35x next year’s earnings, but the S&P Pure Value Index at just 11x. While there’s been good reasons for Growth to outperform to this point, Schutte sees a shift towards areas that are cheaper.

Noting the Bank of England and the Reserve Bank of Australia both reversed themselves on tightening threats in the last couple of weeks, Schutte isn’t seeing any appetite among global central banks to declare war on inflation. Therein lies the risk for the market in future years - that central banks at some point are going to have to really slam on the breaks. That, however, is a question for 2023, or perhaps beyond.

Learn more about your ad choices. Visit megaphone.fm/adchoices