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Expect Sequestration Volatility: Stoltzfus

Tuesday, 19 Feb 2013 | 5:32 PM ET
Expect Sequestration Volatility: John Stoltzfus
As $1.2 trillion in government spending cuts are set to go into effect March 1, here's how to trade it, Oppenheimer Chief Market Strategist John Stoltzfus says.

As $1.2 trillion in government spending cuts are set to go into effect March 1 as part of the budget sequestration, stick with what works, Oppenheimer Chief Market Strategist John Stoltzfus said Tuesday on CNBC.

"Either it'll be a cliffhanger like with the 'fiscal cliff,' where we actually go through the date and then perhaps within 24 hours or so we get some kind of agreement," he said.

"But if we were to go through sequestration full-force – hit the wall at full force – it damages constituencies on both sides of the aisle, and it gives the likelihood that some of these politicians would get a legacy of being said that they helped snatch defeat from the jaws of victory."

On "Fast Money," Stoltzfus said that he expected a lot of rhetoric out of Washington but ultimately disaster would be averted like the effects of the so-called "fiscal cliff" was avoided.

"I think, similarly, we'll come through again. The issues are too great. The progress we've made has cost too much to set back," he said.

"Investors have to get real. Don't look for instant gratification. You can look for near-term gains but expect volatility. Embrace uncertainty. Go with quality. Go with what you understand."

Stoltzfus, whose year-end target for the S&P 500 was 1,585, liked the following sectors: Industrials, materials, financials and energy.

Money managers, he added, from the end of last year until now were starting to realize they were "grossly overweight fixed income are beginning to recognize the value of equities."

Trader disclosure: On Feb. 19, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long C; Karen Finerman is long JPM; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long MSFT; Karen Finerman is long GOOG; Karen Finerman is long GNC; Karen Finerman is short SPY; Karen Finerman is short IWM; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Josh Brown is long AAPL; Josh Brown is long WFC; Josh Brown is long GDX; Josh Brown is long GLD; Josh Brown is long XLU; Josh Brown is long TLT; Josh Brown is long XLF; Josh Brown is long TGT; Josh Brown is long SBUX; Tim Seymour is long AAPL; Tim Seymour is long BAC; Tim Seymour is long INTC; Tim Seymour is long WMT; Tim Seymour is long SBUX; Tim Seymour is long GFI;

For Keith Moore
Neither I nor any member of my household has a financial interest in any covered company to be discussed; Any subject company to be discussed is not currently or within the last 12 months a client of MKM; MKM does not make a market in any covered company to be discussed; MKM does not perform investment banking functions for any covered company to be discussed;

For Colin Gillis
Investment banking (next 3 months): BGC Financial LP and/or its affiliates, expect to receive, or intend to seek, compensation for investment banking services within the next three months from all of the companies referenced within this report: GOOG; Investment banking (next 3 months): BGC Financial LP and/or its affiliates, expect to receive, or intend to seek, compensation for investment banking services within the next three months from all of the companies referenced within this report: AAPL.

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