Back to Life. Back to Reality. So goes the '80's pop hit and so goes a stock market that celebrated the chance to talk about something - anything - else than the debt debate for all of about 30 minutes today.
"It's still pretty sketchy in the near-term" Jeff Saut, Chief Investment Strategist at Raymond James tells Breakout. But that is the extent of his bearishness as he almost seamlessly segues into support levels that survived the "June swoon" and a focus on stocks that work even when benchmark indexes aren't.
"I don't tend to buy the markets," Saut says. "In this climate there have been a number of stocks which have done pretty well while the market has gone nowhere."
He says "energy is still my number one sector" and reiterates the case for EV Energy Partners (EVEP), a $2.4 billion oil & gas partnership that's risen 75% year-to-date AND STILL carries a 4.3% dividend yield. Linn Energy (LINE) and Resolute Energy (REN) are two other sector picks on Saut's list that he thinks aren't being afforded the valuation they deserve for the acreage assets they control.
Alongside energy, Saut says the case for Gold is also still intact, a revisit of his famous ''stuff stocks" call of 2001 which was launched when China was admitted to the World Trade Organization. "I would be a buyer on weakness. I think Gold trades substantially higher from where it is right now," he says.
Also happening behind the glare of the debt ceiling dog fight, Saut says we are "wasting a terrific earnings season" that has seen 73% of companies in the S&P 500 beat estimates. When pressed on their weak guidance, the Florida-based advisor points out that it's "reflected in a 700 basis point equity risk premium, which is telling me that either estimates are too high, OR that were gong into recession, which I don't believe." He adds that "the steep yield curve is forecasting better times ahead" that will see GDP bumping up against 4%.
"Up until a couple weeks ago, Discretionary sector stocks were making all-time highs" Saut points out. "One of my mantras for the past 42-years in this business is never underestimate the American public's abiltity to spend money -even if they dont have it."
So, as this debt drama continues to play out, Saut says stick with the best consumer on Earth, energy, and gold.
What do you think? Your comments are welcomed below, via email @BreakoutCrew@Yahoo.com or to @MattNesto on Twitter