A former chief investment strategist at Bridgewater Associates names three stock sectors that will likely outperform in an uncertain economic environment.
In a new CNBC Television interview, Rebecca Patterson says the US economy is grinding to a halt amid a softening labor market.
Patterson warns that weakness in the US workforce is troubling, given that consumer spending drives two-thirds of GDP.
“From the labor market perspective, it’s definitely slowing. I would even say stalling. You know, the challenge is going to be the disconnect between GDP reports and labor reports in the coming months and maybe quarters. But I think labor and consumption are what you want to be focused on. So to the degree the labor market keeps slowing, eventually that makes consumers more cautious. They have less income, and then the equity story topples over. The GDP story topples over.”
From an investment standpoint, Patterson says she’s keeping an eye on three sectors that have structural support, or underlying forces that drive long-term demand amid short-term market swings.
“I think you need to look at structural trends. The AI beneficiaries, yes, they’re overrun and highly valued. So you’ve got to be careful there. But those AI beneficiaries have a structural support. I think global defense has some structural support, utilities building out that energy demand, you need the supply, that’s going to have some structural support.
So there are some places to go. They are going to be sensitive to the cycle, but they do have some underpinnings that other companies don’t.”
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