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📝 We Like Long Growth, Short Cyclicals Position Into Fed Pivot/Recession: UBS Strategy

While equity investors may be pondering a Fed pivot, few seem to be positioned for one. Below are two pair trades that are designed to provide exposure to two different Fed pivot scenarios. The key differentiating factor between these two scenarios is whether or not there is a recession:

Fed Pivot But No Recession: Long US Housing Basket vs. Short Consumer Staples

Fed Pivot Into A Recession: Long Growth w/ FCF Basket vs. Short Cyclicals

A still unsettled US interest rate market suggests it may he too soon to play for a Fed Pivot. Indeed, with both of these pair trades sitting at YTD lows, it seems equity investors would agree. While I too believe it may be a bit early, a year of declines for both pairs create a compelling risk/return that suggests it is time to at least prepare for a Fed pivot.

- UBS Strategy



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