The following is an excerpt from Ben Levisohn | October 30, 2015 | Barrons.com |
Fundstrat’s Thomas Lee and team note that the U.S. dollar usually weakens following the first rate hike, making companies like Qualcomm (QCOM), General Electric (GE), Fossil (FOSL), Dow Chemical (DOW), and MetLife (MET) solid bets. They explain why:
In many of our recent conversations, we sense many clients are uncomfortably “long cash” but reluctant to add equity exposure (or even more beta). Among the concerns is the pending Fed rate increase—investors expect the US Dollar to rally, undermining equities and furthering headwinds to S&P 500 EPS and also amplified stress for EM borrowers (USD denom. debt). History says consensus is wrong and counterintuitively, when the Fed moves to neutral from easy (11 most recent cycles), USD weakened 55% of the time, with a median decline of 7% in the first year.
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