The 4Q Industrial Sector Summary is a highlight of the sector’s performance and outlook.
US equity indexes are within the summer’s range. A bullish rotation within equities may be taking place as third quarter earnings season are announced. Expectations have been downgraded over the past couple of months. Thus, it sets up the likelihood of a good quarter relative to expectations.
However, some improvement was present in economic data and higher inflation readings. Accordingly, this leaves the possibility of tighter monetary policy from the Fed and even other central banks.
The financial-services sector remains somewhat undervalued and recently traded at a reasonable valuation while awaiting a stricter Clinton regulatory environment but holding out hope for rising interest rates.
Firms with exposure to the smart phone market have faced some tough times, but the strong secular shift away from feature phones and toward more-advanced smartphones is still intact.
Telecom is fairly valued at price/fair value. It is somewhat immune to geopolitical changes and Brexit will have little effect on cross-border transfers of voice or data.
As central banks around the world continue to experiment with ultra-loose monetary policy, utilities continue to hold their place as tone of he best-performing sectors in 2016.
Consumer Discretionary, Consumer Staples, Energy, Healthcare, Industrials, Materials and Real Estate are expected to match market pace.