The best portfolios plays for an uncertain market

US Bank Wealth Management senior investment strategist Rob Haworth joins Market Domination to discuss how investors can best position their portfolios in the current market.

Haworth notes that uncertainty lies ahead with the Federal Reserve’s cutting path and the presidential election in November. Because of the uncertainty, he leans more toward equities rather than fixed income, explaining. “There’s still growth left in this economy. We think there’s still room for improvement, particularly for this rally, to broaden out away from technology, maybe defensives in the near term as interest rates really start to come down a little bit here.”

He believes sectors like real estate, utilities, and healthcare will benefit from interest rate cuts and have more room to grow. As he worries about the demand for commodities, Haworth explains, “In particular, we’re looking towards equal-weighted S&P to get away from what’s been the high fliers through the month of July and into the rest of the sectors as they hopefully gain into year end.”

As the election lies just two months away, he does not expect it to have much of an influence on the market. Instead, he explains, “What we see is markets are focused closely on growth and inflation. That’s really what drives markets as we move ahead.”

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Melanie Riehl

Video Transcript

Rob.

So, so given that, you know, your views there on the economy, the consumer talked about how you want to position your portfolio in the, in the equity market.

Yeah, given that we’re still constructive, even though there are some risks ahead as we highlight, right, federal Federal Reserve uncertainty, we could argue maybe election uncertainty, uh we would still tilt a little bit towards equities rather than fixed income, not because fixed income uh is unattractive, but rather because we think there’s still growth left in this economy, we think there’s still room for improvement, particularly for this rally to broaden out away from uh technology, maybe defensives in the near term as interest rates really start to come down a little bit here and make it easier on the real estate uh on the reeds and on the on the utilities, uh healthcare companies probably have some room to improve.

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So we think there’s room for people to, to see some, some improvement here in particular, we’re looking towards equal weighted S and P to get away from what’s been the high flyers uh through uh through the month of July and into the rest of the sectors as they hopefully gain in the year end.

That is exactly where I want to go, Rob.

I know that you’re like an equal weight S and P, you’re also recently selling off some commodities you’re adding to duration.

It sound, it’s giving me a sniff of defensiveness and I’m, I’m wondering what the primary driver is of that.

What are you worried about?

Well, I, I think we, one, we are worried about, uh the the demand condition for commodities, right?

The trend in in energy has been somewhat softer.

Uh the strategic.

Uh So, so I think we’re, we’re looking at that, but you’re also seeing weakness outside the US, particularly China.

So that’s hampering some of the industrial metals uh trends.

And then we’ve got ample supplies of agriculture.

So that’s softened the commodity story.

Um I think the the other kind of concern we have is our valuations a little rich, do earnings expectations for 2025 maybe need to come down a little bit and that could dampen some enthusiasm for the broader market, but particularly the high flyers, which is why we’re looking into those defensive sectors into this kind of broadening out of the rally outside of such a concentrated focus on just technology and communication services.

Rob, you mentioned the election there, you know, walls, Harris walls, given their first interview uh this evening, I’m just curious as a strategist, how you think about this?

Uh Rob, do I need to be as an investor ready to, to tweak my portfolio depending on who wins or no, as a long term investor.

Should I look through that?

So, uh it kind of depends on what you want to look at for us when we look at it uh for the broad market, uh We really don’t see a big influence in the E in in elections on forward returns for the S and P 500 right there, there, there’s sometimes some temporary issues uh but, but really not, not big ones really.

What we see is markets are focused closely on growth and inflation.

That’s really what drives markets as we move ahead.

So the key though will be as we get to platforms uh are there impacts probably at the sector level?

And that’s where we see more room for investors to pay attention.

Is does this change the prospects for other uh for one sector or the other?

And we’re really waiting to see uh a little more uh both of their platforms really in writing rather than right now in rhetoric uh to do some of that analysis.