Pro Analysis

Jefferies says buy consumer stocks on Trump's 'fiscal relaxation and protectionism'

A trader works on the floor of the New York Stock Exchange (NYSE).
Brendan McDermid | Reuters
A trader works on the floor of the New York Stock Exchange (NYSE).

The economic policies expected to take place during President-elect Donald Trump's time in the White House will benefit shares of companies with heavy domestic revenues, according to Jefferies, which on Tuesday released its investment playbook for 2017.

Although the full details of Trump's economic plan and size of any spending programs are difficult to assess, policies are certain to tilt toward "fiscal relaxation and protectionism," which would be bullish for the U.S. dollar and other inflationary plays, Jefferies' chief global equity strategist, Sean Darby, wrote in a note to clients.

"The unfolding of Trump's policies will occur at a time when wages are increasing. Buy the consumer," Darby said of one of his investment ideas, predicting that a strong dollar and higher discretionary income will boost consumption.

Another key investment theme will be a rise in mergers and acquisitions as a potential repatriation of cash and lower taxes will lead U.S. companies to use those funds to expand their businesses through mergers, Jefferies predicts.