U.S. stock and bond markets are fairly valued, if not somewhat overvalued given the current macroeconomic backdrop, said Jim Sarni, managing principal at Payden & Rygel. With that in mind, investors better watch out for a sharp drop in oil or a sudden downturn in economic growth.

Sarni said more than one short-term interest rate hike in 2016 from the Federal Reserve will also hurt the market, although he regards this probability as low considering the worse-than-expected May jobs report. In his view, while the Fed may want to raise rates it seems as though the data keeps getting in the way.

"Notwithstanding Friday's employment figures, a case can still be reasonably made that higher short-term rates are warranted sometime in 2016 if for no other reason than to begin the interest rate normalization process as it seems clear to us that the US economy no longer needs an emergency level policy," said Sarni.

In this environment, Sarni favors large-cap, high-dividend-paying stocks. On the fixed income side he is a fan of four- to five-year maturity investment grade corporate bonds and higher-yielding municipal bonds, especially for high-net-worth investors seeking to limit taxes.

"For individuals who are not as concerned about taxes, or institutions, I really still like high-yield corporate bonds as well," said Sarni.

Finally, Sarni said the increasing base of "asset class agnostic" investors, or those that are focused more on a specific yield/return objective rather than asset class, is welcome because the low-yield environment is making it more difficult for investors to achieve their goals using old school portfolio practices.

"I think that flexibility is the key when markets are all over the place," said Sarni. "I think people need to be diversified and flexible. Fixed-income people should not be bound by bonds and equity investors should not solely by stuck in stocks."