With ongoing tensions in euro zone sovereign bond markets, stocks have largely escaped the glare of publicity in recent weeks. Investors need to turn their attention to companies once again, and focus on defensive consumer staples and health care, Peter Garnry, equity strategist at Saxo Bank, said on Friday.
“Fundamentally, equities are more attractive than bonds. And we think companies are doing a tremendous job of managing their businesses in this very volatile environment,” Garnry told CNBC.
“We would rather own John Chambers of Cisco than buying Berlusconi in Italy, because we believe more in business people,” he added.
Cisco reported forecast-beating earnings on Wednesday, sending its shares higher.
Garnry likes technology stocks such as Intel and Texas Instruments and believes balance sheets and momentum in such stocks are “great." “We expect Texas Instruments to get a lot of synergies out of the acquisition of National Semiconductor,” Garnry said.
He has recently shifted away from previously-favored energy and materials stocks, and is now more positive on health care and consumer staples.
“The problem is we’re not trading this market on fundamentals any longer. This is a political headline-driven trading environment. For that reason, if we get a meltdown in Italy or if we get a deal done on Italy, then stocks can go ballistic in both directions, and that’s the reason why we think you should be neutral in stocks,” he said.