Canaccord Genuity Morning Coffee on Portfolio Strategy: The Sun is Still Shining

May 9, 2012 10:21 AM EDT
Canaccord Genuity Morning Coffee on Portfolio Strategy: The sun is still shining.

Canaccord Genuity U.S. Portfolio Strategist Tony Dwyer remains bullish on the U.S. market in his most recent publication, believing strong earnings growth will drive equity prices. Dwyer notes that earnings are driven by economic activity, which while slow, should remain positive. Stable inflation and low rates should drive positive economic activity, in his opinion, and he points to improvements in consumer confidence, private sector payrolls and lending standards as potential drivers for economic growth. At this point, he would focus additional equity commitments into Financials, Information Technology and Industrials as the correction progresses and further evidence of sustainable improvement in consumer sentiment, employment and housing emerges. He is lowering his view of the Consumer Discretionary sector. While he continues to believe the macro backdrop of historically low but turning Consumer Confidence, Employment and Housing data acts as a tailwind for the sector, he believes for the time being the sector has likely discounted these influences. The sector has significant outperformed versus the typical early year seasonal trend and is entering a weaker period. In addition, Dwyer notes that the sector’s relative performance is extended and likely nearing the point in the past two cycles that suggest a market weight would be more appropriate.

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