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Holiday shopping to be the strongest in nearly a decade: Strategist

Susannah Lee

Heading into the all-important holiday shopping season, consumers are expected to drive the U.S. economy even further.

“Household net worth is at an all-time high. Right now, holiday shopping looks to be on a path to be the strongest since at least 2006,” said John Canally, investment strategist at LPL Financial.

Canally thinks consumers are "in the best shape they've been in about 10 years heading into the holiday season.” He is also projecting more of the spending to be online this year than at brick-and-mortar stores.

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As for the global consumer, China's spending power is expected to continue to increase. IHS projects the Chinese consumer market to grow to $10.5 trillion by 2023.

Even so, investors have shied away from investing in China after its economic meltdown. Canally disagrees about bailing out of the world’s second-largest economy. “It depends on your time frame. If you're on a long time horizon, now might not be a bad time to actually dabble in China,” he said.

But when it comes to the U.S. stock market, it’s not the consumer the investment strategist is banking on. He’s most bullish in the industrial, technology and health care sectors. “Within industrials, we like transports, and then within health care we are favoring biotech shares,” said Canally.

With the chance of a December rate hike more likely after the FOMC minutes released on Wednesday, Canally is suggesting his clients avoid the telecom and utilities sectors.

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