Financials and consumer discretionary sectors may be the place to be if this scenario plays out, notes Citigroup’s Tobias Levkovich. Technology and industrials may also do well, with the latter outperforming six to 12 months later, the firm’s chief U.S. equity strategist said.
Meanwhile, investors should avoid underperforming sectors like utilities, energy and materials, he added. This is because the economic benefit of lower rates is not immediate. New capacity coming on could also lead to commodity price weakness, Mr. Levkovich said.
He also thinks leveraged buyout and takeover strategies will remain in the background, as the Fed appears unlikely to want to fuel “speculation and aggressive credit risk taking.”
From the National Post's fp Trading Desk