In the Fidelity Insight of the week, Silverstein speaks with Denise Chisholm, a sector strategist for Fidelity Investments. Chisholm talks about earnings growth, noting that the US market was in a corporate profit recession from 2013 to 2016, which she attributes to a defensive rotation. She says that cyclical sector outperformance will remain a key theme in 2018. Chisholm highlights a continued decline in the dollar, which she says will boost corporate profit growth and lead to accelerated inflation.
She also notes that economically sensitive sectors tend to outperform with higher rates, even though a lot of investors think higher rates are bad for growth. Chisholm goes on to say that, based on past instances of tax reform, it will be good for cyclical stocks, like tech, consumer discretionary, energy, industrials, financials, materials and REITs.