The U.S. Federal Reserve’s 50 basis point cut in interest rates last Wednesday caught several market watchers by surprise, a chief market strategist said — sharing where and how he invests in such an environment. The US is “five weeks away from a very chaotic presidential election … and the Fed should never make a move up or down on interest rates this close. The move they made is a big cut,” Kenny of SlateStone Wealth Polcari told CNBC’s ” Street Signs Asia ” on September 19. Calling it a “reduction in the level of crisis,” he added that “people [are] scratching their heads, they go, what does it really mean?’ Federal Reserve Chairman Jerome Powell stressed that the big cut in interest rates does not signal that the risk of a recession is high. “You see growth at a steady pace. You see inflation falling. You see a labor market that is still at very stable levels. So I don’t really see it now,” he said. Sector preferences When asked how he positions his portfolio in this context, Polcari said most of his investments are in equities, with a small percentage in fixed income. in terms of sectors, it stays away from tech and accumulates utilities, “big energy dividends”, consumer staples, financials and slow materials. (I will) give technology a break [and] let it retire before I add more money,” Polcari said. ‘Perfect stock’ Among the stocks he’s betting on is Energy Transfer, a midstream energy services company. Polcari sees it as the “perfect stock” to play falling rates He likes that it is “prime” and pays a “good year-to-date dividend of 7.99%.” The stock, 18 give it a buy or overweight rating, while two have an average hold rating of 19; $25, giving it a nearly 19% upside The new products include a glucagon-type drug called MariTide, unlike the weekly dose required by other drugs on the market, is undergoing trials with the U.S. Food and Drug Administration, said Polcari. The company expects “to come out with positive results early next year,” he added.Amgen shares are up just over 17% of the 31 analysts covering the stock, giving it a buy rating or overweight, 14 have hold ratings and two have sell ratings. The average price target for Amgen is $325.33, according to FactSet data, giving it a 3.6% downside. ‘On sale’ On the technology front, Polcari likes ASML, which he says is ‘on sale’. The stock is “off about 20% to 25% or so and that’s a lot [much] like Nvidia — is at the nexus of the entire technology trade,” he explained. ASML’s shares trade on Euronext Amsterdam and Nasdaq. Year-to-date, its shares are up about 5.1%. Of the 38 analysts covering the stock , 29 give it a buy or overweight rating, eight have hold calls and one has an underweight rating The average price target for ASML is 1,057.52 euros ($1,170), according to FactSet data, giving it a 46.2% upside -Technology engines that the world’s largest chip makers rely on to make the most advanced chips With companies in every ‘industry around the world using artificial intelligence to change [their] businesses, ASML will be one of those names like Nvidia sitting there. So when it’s on sale, you should take advantage of it,” added Polcari. — CNBC’s Sean Conlon in this report.
