The Fed has proven that it will do whatever it takes to support a recovery, and that recovery is already well underway, Jay Pelosky, CIO and co-founder of TPW Investment Management, told Real Vision during today’s Daily Briefing.
Pelosky argued that although there’s negative bearish sentiment out there, there’s also tremendous liquidity around the world that will find its home in financial assets. He thinks we entered a new bull market for equities when the S&P cleared the 3,000 level two weeks ago.
But according to Pelosky, the big plays for 2020 won’t be in tech but in commodities, as well as in value stocks and cyclicals.
“The flagship of this new bull market will be leadership away from tech, growth, and the U.S. dollar to other parts of world, to the cyclical, to the value segments, and to the commodity space,” he said. “That’s the area of opportunity.”
One pocket of opportunity Pelosky likes is European financials. With banks selling at 27% below fair value, he said the value is clear. He also pointed to European equities being completely under-owned and trading at significant discount to the U.S. as evidence that there’s tremendous room there. Europe’s Green Deal and joint recovery program are also reasons Pelosky is bullish on European financials.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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