On Monday the stock market managed to confound the maximum number of people. With a worst-case scenario failing to unfold in Ukraine and yet another enormous deal in the healthcare sector, stocks actually staged a fairly zesty rally prior to settling back down into the end of the day. It was yet another choppy day where sharp selling in once high-flying names was disguised by strength in megacaps like Microsoft (MSFT) and Apple (AAPL).
As stocks sawtooth their way through the quarter, investors are struggling to come to grips with the fact that positioning yourself in the right sector of the stock market is preferable than just owning the entire asset class.
In In the attached clip Brad McMillan of Commonwealth Financial offers three sectors to get long in the face of additional uncertainty and a packed schedule of economic data later this week.
In the attached clip McMillan offers his picks and logic.
“What we’re seeing here is a big resumption of business capital spending and that’s what’s going to drive the industrials higher.”
So far this has been one thing lacking in the recovery as a flood of buybacks and mergers have been pushing the market. McMillan is looking for an upside surprise on corporate spending.
The hottest group extant has seen more than $250 billion in M&A activity over the last four months. McMillan thinks the momentum continues.
“One word: ObamaCare. Regardless of whether you like this politically or not you have millions of people who are going to be consuming healthcare with everything that implies. That’s the immediate juice.”
“Consumer income is growing faster than spending. Not only are they boosting their spending they’re starting to pick it up more,” McMillan insists. He says labor participation is picking up and that’s going to lead to more spending.
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