Sector	PEFy1	PEFy2	2017Growth
Consumer Discretionary	14.65	12.77	13.48
Consumer Staples	18.99	16.85	14.03
Energy	11.10	9.89	12.45
Financials	11.81	10.50	11.55
Health Care	17.45	15.61	11.15
Industrials	15.32	13.50	13.89
Information Technology	15.41	13.51	12.42
Materials	11.53	10.46	9.95
Real Estate	14.41	13.68	7.83
Telecommunication Services	13.06	11.40	17.27
Utilities	12.10	10.98	10.96

Chart: Industrials, Capital Goods Companies in Focus

Various Valuation Metric Distributions

Source: ML

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Out of Energy

Despite quite healthy oil price – energy sector has not been able to catch up in October. It is still one of the worse sectors in October and it is the worst YTD. This is despite Brent oil price trades at 58$/bbl.

Materials are still far safer proxy to play energy rebound and commodities rebound in general. Global metals and mining stocks are up 20% ytd and have been up 3% in October. While energy stocks are down 1% Ytd and have been flat in October.

Information technology stocks are darlings of the market this year and have been for the last several years.

Electric utilities +14% ytd and Transportation industry +28% ytd has been showing very healthy performance YTD implying rebounding economy. Consumer discretionary sector a proxy for excess liquidity in the system and also proxy for the economy are rebounding somewhat.

In Telecoms wireless show okay performance but diversified telecoms are the perennial laggards.

We continue to like materials stocks as well as information technology stocks. We can also bet that the consumer discretionary stocks will be supported stronger in the end of the year. While we continue to dislike energy stocks and consumer staples.

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