In This Article:
Uncertainty around President Trump's shifting tariff policy has investors wondering where to find stability and which sectors could see a strong rebound.
Sound Income Strategies co-chief investment officer Eric Beyrich joins Catalysts to explain why he favors utilities (XLU) and staples (XLP) for stability. However, he notes that sectors that have been hit hard, such as materials (XLB) and energy (XLE), have strong potential of a big upside.
To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
Eric, great to speak with you this morning. You say that you have to stay in bunker stocks. It feels like what a bunker stock is keeps changing in this environment. How are you defining that right now?
Yeah, I actually I agree with Tom. You'll make more money buying the bond bombed out areas and the bunker stocks, but for our investors who are mostly retirees that want income, now we stay in the, you know, utilities areas a little bit more and more staples just because there's less volatility and more income. But uh, you should always look at the areas that are getting hurt the most for the biggest upside. Um, right now I was just talking about stability, areas where it's it's safer for people and they can sleep at night.
And talk to me then about the most beaten up area of the market and your view on a sector basis, which one is the most attractive?
Well, attractive and beaten up aren't necessarily the same thing. I think the materials are getting hit the worst and they have the potential most upside, but remember as people slow down their order rates to build goods, one of the first areas that gets hit are raw materials. And also energy we saw oil prices break $60 on the downside. That's going to have significant ramifications if there isn't a rebound. It's a function of both OPEC reconsidering people who have violated their agreements and also demand slowing down partially due to this uncertainty. So those areas are the two most affected and and most at risk and potentially have the most upside coming back.
And Tom Hayes is still here with us. Tom, you had some similar thoughts to Eric on that front. Do you have a question for Eric?
Yeah, I I absolutely agree with you on the material side. Absolutely bombed out. We're looking uh we we kind of share an affinity here. I can tell you have a value tilt to you. We're looking at Albemarle for instance, they got $3 billion of excess liquidity. Are there any uh materials names that you're looking at, Eric?
Well, we we own a bunch of them. One that I really like but a lot of people don't because of uh their afraid the dividend will be cut is Dow Chemical. One of the best companies in the world. Unfortunately, they they have had their inline Dell, similar company also in plastics. I've seen their demand come down a bit. Um, but I think over a long period of time, those are two companies that you definitely want to own. They're both high yielding stocks and they have substantial capacity for rebound both in their margins, volumes and earnings, as well as of course cash flows.
