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LPL Financial chief market strategist Jeff Kleintop weighs in on industries favored by Democrats and Republicans and what the market is saying about t...
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I think closed -- President Obama and it around near virtually deadlocked going into the dimensions but as the market already shown signs of what the results will be in November.
Joining us now Jeff Klein dot LPL.
Financial's chief market strategist.
I -- ruining hear about this is it's really just -- he basically split the stock universe between red and blue right.
So you have democratic sectors and Republican sectors just go -- -- really quickly.
You bet so there's some there's -- industry's very much -- by the Democrats these are things like.
Of health care facilities and a life -- construction materials from -- highway spending those types of things.
On the other side you've got a number of industries more favorably pre disposed towards a Republican outcome these -- things like oil and gas exploration the coal industry.
Big banks like diversified financials this is that we break the only universe it would take a look at what the stock market saying.
What's priced in on Wall Street in terms of what might happen did it during the election and what it looks like is the market service like many of the larger polls.
Begun to predict more of an outcome towards the Democrats keeping their seats in the senate and -- retaining the White House that's a big shift from what we saw earlier this year.
So why was more than Republican sectors in the -- for awhile that what you're saying.
The Republican sectors had been of faring better over the course of this year and increasingly.
It gosh I'd I'd say early this summer right around when the Supreme Court.
Upheld the Affordable Care Act.
That credit a big shift towards some of these sectors that -- certainly are very affected by regulation and legislation they'll be more favorably biased towards the democratic outcome.
They have led the market since then although.
I'd say in the last month or so we've kind of seen that flatten out so.
Very early in the year January February saw move towards that the Democrats.
That echoed again in June since then it's stabilized but certainly the next few weeks will be pivotal.
Yet that's a -- -- what about the dogs of the Dow you know we got a lot of people holding dividend stocks these days some -- stealing Telecom utilities.
They've outperformed but.
Isn't it time or do you think it's time people start pulling money out because -- cut again top heavy.
Did -- do -- getting top heavy you know it's interesting.
Because yield was the theme right the -- the -- of the dog days of summer have been the winners yet.
In much of August we've actually seen the cyclical stocks -- a little bit better.
Today for example utilities not so great Telecom not so great to be guilders a consumer discretionary doing pretty well right so again we're seeing more that lower yielding more cyclical company I think that's a sign.
That may -- markets are beginning to price said.
More higher probability QE3 from the Fed which can kills the yield trade if you will we see both in the stock market.
And the bond market begins to push yields higher pushes investors in -- more cyclical rather than higher yielding stocks.
-- -- this market is just love in the more money my money thing Jeff -- -- thank you very much for sharing your study and your insights.
