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Truist co-chief investment officer chief market strategist Keith Lerner went neutral on stocks back in February. One sector he is still overweight, though, is utilities. Find out why in the video above.
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I was looking at some of your sector allocations, which I thought were pretty interesting. Um, you still like utilities here. Utilities has been a group that's been sort of was hot last year tied to the AI trade. It has sold off some um this year. What's your current thinking here on sort of the utilities dynamics in this environment?
Yeah, well, and I would probably put this in broader context. Um, you know, we have utilities and overweight. We have communication services and we have financials. And if you think about that, those are three different areas, right? One's a defensive, you know, one's more of a growth and one's more of a cyclical. And if we're going to have this choppy market going back and forth, we're trying to find the best one of each sector. So, uh, and I think if we have a little bit of a rally here, which I think we actually will on a short-term basis, utilities will likely underperform, but I think it will provide stability as we're thinking over the next, you know, three months, six months. They don't have tariff tariff exposure really, um solid dividend about above 3%, trading at a discount, relative price trends uh somewhat positive. I also think what you saw, which Jerry just showed showing the board, I do think some money will rotate back into tech short term. We are neutral um tech, but we are overweight communication services. I was just looking uh this morning the uh the MAG 7 PE um in July of last year was around 33, 34. Now it's down to about 22. That's the same level it was around October of 20 2022, right around Chat GPT came out. Now, there are some risks with earnings going forward, so I want to keep that in mind, but I think during this period, you will likely see now after these stocks have been hit, a rotation back. So I'd also look at communication services as well. And more broadly, uh Julie asked the question, what do you do here? I mean, first of all, we're telling you know, our clients, if you have a lot of cash, it's going to be a bit of a bumpy ride. Dollar cost average into the market. Also, if you're panicking, we don't think this is the right time to be selling after you're down 17%. As long as you can, you know, stomach and you don't need the money, you know, right now, we think there will at least be a bounce to sell at higher levels.