The "R" Word

On Tuesday, a Goldman Sachs strategist uttered the dreaded “R”-word, recession. David Kostin recommended clients buy consumer staples and health care stocks in order to play defense. Should you follow his advice?

Dylan Ratigan shows the following chart, which suggests that during the 6 months prior to a recession consumer staples jump more than any other sector.

SIX MONTHS PRIOR TO RECESSION: Median Gains, S&P Sectors

Cons. Staples + 15.3%
Health Care +8.8%
Materials +8.6%
Financials - 1.5%
Tech - 5.3%
Telecom – 6.8%

Source: Compustat, Goldman Sachs Research.

To say “the risk of recession is rising substantially” seems a little after the fact says Karen Finerman. Isn't that the horse is out of the barn news? However, as a defense play she likes Kraft (KFT).

Guy Adami prefers Unilever (UL) based on the same reasoning.

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Trader disclosure: On Sept. 11, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (INTC); Najarian Owns (BJS); Najarian Is Short (GS); Pete Najarian Is The Co-Founder Of optionmonster.com, Finerman's Firm Owns (CMVT), (DVA), (JNJ), (KFT), Finerman's Firm Owns S&P 500 Puts And Calls; Finerman's Firm Owns Russell 2000 Puts; Finerman's Firm And Finerman Own (FTWR), (HD)