Mackenzie Minute: October 21, 2016
Rick Weed, Lead of the Mackenzie Systematic Strategies Team, speaks about the U.S. Election, Brexit, the Fed and how they could impact his team’s funds in the short term.
So in the Systematic Strategies Team, we've noticed three things we think will affect the markets and our products going forward.
The first, is the increasing clarity on the U.S. Presidential election. It certainly appears that there will be a Democratic administration going forward.
The second is an interest rate increase in December. The markets have really priced a Fed raise of interest rates in December; however, have discounted raises going forward due to the economic uncertainty that the Fed has communicated.
And, the last is, we've noticed a big increase in the U.K.'s stock market. Post-Brexit crash, the market has recovered and it’s recovered beyond the 2015 levels; however, the pound has not recovered.
In the U.S. financials, there will be increasing regulatory pressure as well as a rise in interest rates. So, we've underweight them. However, in the U.K., we are actually overweight financial services companies, not the banks, because of the strength we spoke about before.
The second is in healthcare. We think going forward, given the increasing regulatory regime because of the new administration, that healthcare should probably do poorly going forward.
Third, is utilities. Utilities interest rate increases tend to hurt utilities as well as increasing regulations. We are positioning more in the renewable energy, which should actually benefit from new regulations.
And, the last, is technology. We're overweight technology. And, we feel that companies are really going to try and increase their bottom lines by using more and more technology to remove costs. More automation and more productivity helps the company's bottom line.