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UBS Strategist Says Investors Should Focus on S&P 500 Stocks

Wednesday, 21 Mar 2007 | 10:55 AM ET

David Bianco, U.S. Equities Strategist for UBS, told CNBC’s “Squawk on the Street” that the S&P 500 offers investors a solid play on the strong global economy.

“The S&P 500 has material exposure to the global economy,” Bianco said Wednesday. “I’m often reminding clients that the global economy and business spending are more important to S&P 500 earnings than consumer discretionary spending.”

He likes consumer staples such as Coca-Cola and Proctor & Gamble, but said he’s over-weighted in industrials, technology and energy stocks, especially oil field services.

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“I still believe the best play on the global economy in the S&P 500 is capital goods,” Bianco said. “Names like GE, Textron and even Federal Express are plays on the global economy.” GE is the parent of CNBC.

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Bianco said the U.S. economy is slowing, but many emerging markets, including China, are growing internally.

“We expect that to continue,” he said.

Bianco said investors shouldn’t fret about a weaker dollar because it would make U.S. companies more competitive overseas.

“A weaker dollar would be positive to their earnings from a currency translation standpoint,” Bianco said. “It would be particularly beneficial for capital goods companies because it would make them more competitive with their German and Japanese competitors.”

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