A powerful non-tech rotation could begin this month: Wells Fargo

A powerful non-tech rotation could begin this month: Wells Fargo


Chris Harvey of Wells Fargo Securities calls Big Tech’s recent outperformance “false head.”

In a recent note to investors, he wrote that economically sensitive groups will overtake growth as the primary market driver, and the powerful rotation could take place as early as this month. He therefore urges investors overweighted in Big Tech to abandon market performance.

“Take some profits,” the company’s head of equity strategy told CNBC.Trading nation“Friday.” It’s not that we hate technology. These are just a few of the tech companies that are high growth, high risk, [and] high multiple. “

Meanwhile, Wall Street comes out with a positive month. The techie Nasdaq saw his sixth consecutive monthly gain. It rebounded more than 7% in April, closing the month at 13,860.76. The index is 2.5% below its all-time high last Thursday.

Harvey attributes strength of growth and technology to benchmark Yield on 10-year treasury bills down almost 6% in the past month. It ended the month of April at 1.62%

However, Harvey expects yields to break. His company predicts 10-year yield to hit 2% next month.

“We’re just starting a very aggressive GDP cycle, a very aggressive recovery. Typically, when you have growth and growth is abundant, you don’t want to pay a premium for technology,” he said. declared. “This is where we are now.”

Harvey believes investors have failed to come to terms with the problems inflation will create for big tech, growth stocks and the market in general.

“We’re going to start thinking about things like higher taxes. When are we going to decrease? How far are the rates going – assuming they go up,” Harvey said. “You can have a little more jerky.”

Harvey plans to use any turbulence to his advantage. Its strategy: Target groups well positioned to take advantage of inflation and a booming economy.

“We want to add more cyclicality,” Harvey said. “We want to do this by financial. We want to do this in industry. We want to do this in consumer services – whether hotels. Whether restaurants. “

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