LIVE MARKETS-As stagflation simmers, beware of bounces

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AS STAGFLATION SIMMERS, BEWARE OF BOUNCES

From April 8 through last Friday, April 25, the S&P 500 index .SPX rallied more than 10% on a closing basis.

However, Bob Doll, chief investment officer at Crossmark Global Investments, remains skeptical about the market having seen its lows, especially since he thinks the specter of stagflation continues to simmer.

"The inflation risks are larger for the U.S., courtesy of both the weaker U.S. dollar and because tariffs will have a bigger impact on the U.S. than elsewhere," writes Doll in his latest "Deliberations."

As Doll sees it, overall global growth has been dented and prospects will remain cloudy until there is clarity on the conclusion of the trade war, which he says "still seems a long way off."

Therefore, Doll remains wary of any market bounces and believes it's premature to upgrade Crossmark's current defensive investment stance.

"We are entering a stagflationary period with economic activity cooling even as input and output price gauges are holding at elevated levels," writes Doll.

He adds "the U.S. dollar is oversold and could briefly bounce, but the downtrend will likely persist."

(Terence Gabriel)

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