Software and Services

Buy The Software Breakout…

Highlights Portfolio Strategy Corporate sector selling price inflation is nil while leading wage inflation indicators signal additional labor cost increases in the coming months. The risk is that profit margins have already peaked for the cycle. We reiterate our tactically cautious overall…

The Race To $1 Trillion…

  Overweight (High-Conviction) One of the key themes for 2019 we noted in Monday’s Weekly Report is the later stages of the U.S. capex upcycle; we highlight our high-conviction overweight recommendation on the S&P software index, a hold-over from last year, which is levered to this…

Highlights Portfolio Strategy Higher interest rates, with the Federal Reserve tightening monetary policy three more times in the next seven months, will be the dominant theme next year. All four of our high-conviction underweight calls are levered to this theme. The later stages of the U.S.…

Overweight (High-conviction) Despite recent tech stock ills, software stocks continue to defy gravity and remain in a multi-year uptrend, still above the dotcom bubble relative performance highs (top panel). We reiterate our high-conviction overweight status and within tech we continue to…

Highlights Portfolio Strategy Frenzied software M&A activity, the ongoing capex upcycle, firming industry operating metrics and pristine balance sheets suggest that software stocks are a must have for equity portfolios. Rising interest rates along with the Fed's quantitative tightening,…

Highlights The renaming of telecommunication services and reallocation of some tech and consumer discretionary stocks ends a long run of a purely domestic, defensive GICS1 sector. Our initial recommendation is underweight for the newly minted S&P communication services sector. Interactive…