Aberdeen Asset Management predicts a U-shaped recovery for the US economy through the second half...
Aberdeen Asset Management predicts a U-shaped recovery for the US economy through the second half of 2001 and into 2002, contrary to Wall Street's forgettable performance in the last few days.
Rupert Della Porta, head of US equities at Aberdeen says valuations, with P/Es at around 21 to 22 times, are at their most attractive levels for three years highlighting healthcare, financials and energy among his favourite sectors.
Aberdeen says easing monetary policy and the fiscal stimulus of President Bush's tax reduction policy will assist the recovery.
Aberdeen also concedes inflation increases could be on the cards next year but reckons it will be tempered by the likelihood of unemployment rising above 5% from around 4%, which means labour wage demands should fall.
More downgrades in the overall market are anticipated but the Federal Reserve's dramatic monetary easing should counterbalance this, says Aberdeen.
Della Porta specifically underlines HCA and United Healthcare as good companies in the healthcare sector due to their strong pricing and reasonable volume growth. Among financials, mortgage companies such as Fannie Mae and Freddie Mac are favoured.
Aberdeen is underweight in telecoms, suggesting this is the sector to avoid. Over capacity, it says, remains a problem with more bankruptcies expected among CLEC companies in coming months.
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