Sector Ratings Update and Model Portfolio Changes

The start of 2023 has brought about a shift in market leadership. As such, we’re making the following changes to our sector ratings and updating our US Equity Model Portfolio to reflect those changes.

First, we’re downgrading the Consumer Staples sector from Overweight to Equalweight. We initially upgraded Staples in December on the belief that they would break out to new highs on a relative basis. The sector indeed broke out, but it has since reversed those gains. From failed moves come fast moves in the opposite direction, and we now believe the multi-year uptrend in the group could be at an end. We’ll wait for more data, but for now believe a neutral approach to the group is best.

We saw a similar failed breakout in the Health Care sector:

However, we view this pullback as a temporary setback within an ongoing uptrend. As such, we’re raising our rating on Health Care to Overweight. Here are our current sector ratings:

We’re adjusting our model portfolio to reflect the updated ratings. These changes will be effective as of the close on January 20.

We will have more to say about these developments in our upcoming Monthly Premium Newsletter.

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