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Animal Spirits... or a Bubble? Zacks FEB Market Strategy
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Note: This is an excerpt from Zacks Chief Strategist John Blank’s full Market Strategy report. To access the entire PDF, click here.
Introduction
The February version of Zacks market strategy outlines the following themes.
What produces 2017 U.S. optimism?
Trump unleashes animal spirits. Beneath that, stellar U.S. job gains and stronger wages build. High stock prices support consumer spending. Technicals are in momentum mode. Traders ignore worry, sharing Republican optimism. Demographics can build Health Care, but the ACA gets repealed. Does it get replaced, or not? House buying & construction get stronger still. For banks, a rise in rates is likely across 2017.
What’s alive for pessimists?
Valuations. A 14-year high on the U.S. dollar hits harder. Recession worry centers on real estate. Rising rates may push down home and business construction demand. A bubble popping somewhere is possible.
Zacks Sector/Industry/Company Telescope
In February’s sector/industry tables, the big upward move came from Industrials. Construction demand is clearly quite strong in this environment.
There are a number of other strong niches. Financials lead in the rising rate environment called for in 2017. The Materials sector gets a bid from buying by Mainland China. Infrastructure for the One Belt-One Road project is showing up. Info Tech has a RED HOT spot in Semiconductors, once again.
The losers are out-of-favor sectors -- Health Care and Consumer Staples. These 2 sectors cannot seem to shake off the pessimism. The shorts are all over Drug and Biotech stocks, still.
(1) Financials remained Very Attractive again. The Invest Banking & Brokering, Banks & Thrifts, Banks-Major, and Finance are the leaders.
Top Zacks #1 Rank (STRONG BUY): Raymond James (RJF - Free Report)
Raymond James Financial Inc. is a holding company whose subsidiaries are engaged principally in the securities brokerage business including the underwriting, distribution, trading and brokerage of equity and debt securities, and the sale of tax advantaged investments, mutual funds and other investment products and provides investment management services for retail and institutional clients.
(2) Industrials have risen to a Very Attractive sector. This is due to Construction-Building Services, Machinery-Electrical and Metal Fabricating. Railroads and Machinery are doing better, too.
Top Zacks #1 Rank (STRONG BUY): Sandvik AB (SDVKY - Free Report)
Sandvik is a high-tech engineering group with advanced products and a world-leading position within selected areas. Worldwide business activities are conducted through representation in 130 countries.
(3) Materials stay an Attractive Sector. The leaders are Paper, Steel and Metals-Non-Ferrous. China must be buying again.
Top Zacks #1 Rank (STRONG BUY): Stora Enso Oyi (SEOAY - Free Report)
Stora Enso is an integrated forest products company producing magazine papers, newsprint, fine papers and packaging boards, areas in which the Group is a global market leader. Stora Enso also conducts extensive sawmilling operations. To strengthen its market position and better serve customers in the United States, the company acquired the U.S.-based, Consolidated Papers, Inc. in 2000.
(4) Info Tech remains a Market Weight. But the Semis are RED HOT!
(5) Consumer Discretionary rises to a Market Weight. The Autos/Tires/Trucks is best, followed by Media, Home Furnishing-Appliances and Leisure Services.
(6) Energy is a solid Market Weight. The Oil E&P, Oil & Gas Integrated, Oil & Gas Pipelines and Coal industries show the effects of positive Trump trade sentiment.
(7) Utilities rose to a Market Weight. The Utilities-Water Supply group got a bid.
(8) Telcos remain Unattractive. Defensives are not in favor.
(9) Health Care remains Unattractive. This out-of-favor sector just can’t get moving.
(10) Consumer Staples is Very Unattractive again. The sole bright spot is Agri-business.
Note: This is an excerpt from Zacks Chief Strategist John Blank’s full Market Strategy report. To access the entire PDF, click here.
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Animal Spirits... or a Bubble? Zacks FEB Market Strategy
Note: This is an excerpt from Zacks Chief Strategist John Blank’s full Market Strategy report. To access the entire PDF, click here.
Introduction
The February version of Zacks market strategy outlines the following themes.
What produces 2017 U.S. optimism?
Trump unleashes animal spirits. Beneath that, stellar U.S. job gains and stronger wages build. High stock prices support consumer spending. Technicals are in momentum mode. Traders ignore worry, sharing Republican optimism. Demographics can build Health Care, but the ACA gets repealed. Does it get replaced, or not? House buying & construction get stronger still. For banks, a rise in rates is likely across 2017.
What’s alive for pessimists?
Valuations. A 14-year high on the U.S. dollar hits harder. Recession worry centers on real estate. Rising rates may push down home and business construction demand. A bubble popping somewhere is possible.
Zacks Sector/Industry/Company Telescope
In February’s sector/industry tables, the big upward move came from Industrials. Construction demand is clearly quite strong in this environment.
There are a number of other strong niches. Financials lead in the rising rate environment called for in 2017. The Materials sector gets a bid from buying by Mainland China. Infrastructure for the One Belt-One Road project is showing up. Info Tech has a RED HOT spot in Semiconductors, once again.
The losers are out-of-favor sectors -- Health Care and Consumer Staples. These 2 sectors cannot seem to shake off the pessimism. The shorts are all over Drug and Biotech stocks, still.
(1) Financials remained Very Attractive again. The Invest Banking & Brokering, Banks & Thrifts, Banks-Major, and Finance are the leaders.
Top Zacks #1 Rank (STRONG BUY): Raymond James (RJF - Free Report)
Raymond James Financial Inc. is a holding company whose subsidiaries are engaged principally in the securities brokerage business including the underwriting, distribution, trading and brokerage of equity and debt securities, and the sale of tax advantaged investments, mutual funds and other investment products and provides investment management services for retail and institutional clients.
(2) Industrials have risen to a Very Attractive sector. This is due to Construction-Building Services, Machinery-Electrical and Metal Fabricating. Railroads and Machinery are doing better, too.
Top Zacks #1 Rank (STRONG BUY): Sandvik AB (SDVKY - Free Report)
Sandvik is a high-tech engineering group with advanced products and a world-leading position within selected areas. Worldwide business activities are conducted through representation in 130 countries.
(3) Materials stay an Attractive Sector. The leaders are Paper, Steel and Metals-Non-Ferrous. China must be buying again.
Top Zacks #1 Rank (STRONG BUY): Stora Enso Oyi (SEOAY - Free Report)
Stora Enso is an integrated forest products company producing magazine papers, newsprint, fine papers and packaging boards, areas in which the Group is a global market leader. Stora Enso also conducts extensive sawmilling operations. To strengthen its market position and better serve customers in the United States, the company acquired the U.S.-based, Consolidated Papers, Inc. in 2000.
(4) Info Tech remains a Market Weight. But the Semis are RED HOT!
(5) Consumer Discretionary rises to a Market Weight. The Autos/Tires/Trucks is best, followed by Media, Home Furnishing-Appliances and Leisure Services.
(6) Energy is a solid Market Weight. The Oil E&P, Oil & Gas Integrated, Oil & Gas Pipelines and Coal industries show the effects of positive Trump trade sentiment.
(7) Utilities rose to a Market Weight. The Utilities-Water Supply group got a bid.
(8) Telcos remain Unattractive. Defensives are not in favor.
(9) Health Care remains Unattractive. This out-of-favor sector just can’t get moving.
(10) Consumer Staples is Very Unattractive again. The sole bright spot is Agri-business.
Note: This is an excerpt from Zacks Chief Strategist John Blank’s full Market Strategy report. To access the entire PDF, click here.