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Buy discount retailers in a slow-growth environment

Friday, May 27, 2016 - 03:55

Get set for slow growth and a range-bound stock market, says David Schiegoleit of U.S. Bank. He favors tech, consumer, and healthcare stocks.

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Stocks rising as investors awaited speech by fed chair Janet Yellen for clues on the timing and interest rate hike. Joining us from Los Angeles for an house on the markets David Segal I. He's managing director of investments at a private client reserves of US bank welcome back it. Jenny Jones speaking at Harvard today. Oh what he anticipate she'll say and what do you think invested a stand on in terms of the timing and the number of interest rate hikes this year. Yet we're looking forward throughout the second half of the year we do hold. Firm to our predictions that that we should seek to rate hikes. However initially we thought they would be due in December but given the bricks that referendum happening in June. We think that might be reason enough to give the Fed pause until July. I think creating that much turbulence and the market between eight and rate hike. And it potential for exit at the same time. It is reason enough for the Fed to push it out one month and July so. Our base case scenario barring any new data that comes out that they kind of throws things off course would be July. December's scenario for what David. Investors seem to have gotten comfortable with the idea of an early rate hike this summer. How high the UC BS and 500 going. From these levels even rally. Yet if you know where we seem to be in a pretty tightly range bound market over the past eighteen months. And that we think actually that should continue throughout. This year particularly in the second and third quarter. There are not many catalyst out there that can drive the market much higher than say. 2150. On the S&P 500. You're gonna need something new and different it's not currently in the metrics to push markets higher. But conversely on the downside we don't see a lot of risk factors that can push it below say. And 1850 you're 18100 level there's no inflation. Working its way into the market really we don't see much in the way recession risk. So we're sandwiched between these two opposing forces that have kind of squished the market if you well. Over the past eighteen months and frankly I think that's an can continue what David given year's event and as a range bound market night the slow growth environment what stocks do you favor or sectors do you think at this point. Yet we were looking at consumer discretionary. Technology in health care. I'll within those three. We really favor. The consumer discretionary portions of the market can benefit. From a slow growth environment as opposed to a rapid growth environment. I think of the deep discount retailers being one as opposed to say the luxury goods retailers which we don't think they're necessarily poised right now in fact. Even today we see big lots stock rallying strongly after reports ninth straight quarterly rise in same store sales you mentioned you know discount vs department stores. Are discount retailers such as big a lot to TJX which is often putting in good results. Goodbye at this point they've they've been rising. Yeah we like that sector overall. Like ice at eight and that benefit a little bit more that. Place on the price point scale that lowered discount. Model. Tends to benefit more from a slow growth environment goods because you have consumers. Spending a little bit more money. However they're being cautious about it and focusing on the basic necessities and kind of keeping. Things close to the chest so to speak in terms of their spending habits. Which bodes well for the discounts that does not necessarily bode well for the luxury hours okay David thanks for sharing your thoughts. Thank you so much our thanks to David fetal life and US bank I'm Fred Katayama this is Roy.

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Buy discount retailers in a slow-growth environment

Friday, May 27, 2016 - 03:55