Jason Trennert, managing partner at Strategas, stopped by the "Breakout" set with some words of caution regarding the budget battle that threatens to result in a government shutdown in Washington.
While the temporary shutdown of the '90s had little to no impact on the U.S. markets, this time could be different given the extent to which our current economy is reliant on federal stimulus.
Nonetheless, with foreign markets looking dodgy and bond rates near rock bottom, U.S. equities are akin to "the best house in a bad neighborhood," he says. Trennert says U.S. corporations are getting little to no credit for their massive cash hoards and, as a result, are trading at low valuations. He notes that Apple (AAPL), despite its ever-growing stock price, is still trading at a mere 14 times earnings.
Within that sketchy market, Trennert is leaning toward the usual suspects -- energy, industrials and tech. Citing both economic and technical factors, he sees no reason to wander into sectors that have missed the economic recovery to this point.
It's difficult to contradict the savvy Trennert in a market where consumer names issuing warnings drop double-digits and companies such as Cameron (CAM) and Halliburton (HAL) are able to issue warnings with relative impunity.
Watch the video to hear him flesh out his thoughts and name some names in terms of his favorite stocks.
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