Sectors investors are betting on and avoiding
The “One Big Beautiful Bill” has drawn mixed reactions on Wall Street, but for some investors, it represents a blueprint for a new phase of U.S. economic policy. The bill , which is characterized by extensive tax reforms and selective incentives, is forecast to add to the federal deficit and has drawn criticism and triggered warnings from credit agencies. Strategists CNBC spoke to say they believe the bill is more than just another round of stimulus, and investors are making clear sectoral bets. ‘A pivot point’ Peter Andersen, founder of Andersen Capital Management, calls the bill “a pivot point,” arguing that the U.S. is “moving from monetary stimulus to fiscal muscle.” The government is shifting away from relying on the Federal Reserve’s near-zero interest rates and bond-buying programs to boost the economy, and turning instead to targeted government spending. He said infrastructure is “the most exciting aspect” of the bill’s national security emphasis. That, he added, involves not just “bridges and bombs,” but also firewalls and data security. The OBBB is allocating roughly $150 billion in defense aimed at bolstering industry capacity, including funding for drones, military infrastructure and artificial intelligence. “Cybersecurity will be the new front line of national power,” he said. His portfolio of 14 high-conviction stocks include s four cybersecurity names, including Palo Alto and CyberArk , and an equipment rental company with clients in the manufacturing industry, United Rentals . Industrials and technology plays Similarly for Tat Wai Toh, head of portfolio strategy at RBC Wealth Management Asia, the bill signals “the next fiscal supercycle” — one built on structural industrial policy rather than short-term stimulus. “This is more than infrastructure repainting. It’s a restructuring of industrial policy, with AI, defense, logistics, and electrification at its core,” he said. RBC is overweight on sectors that “dig, build, ship, power, and protect,” including heavy electricals, infrastructure, oilfield services, defense, and banks which Toh believes are poised to benefit from rising loan demand. Likewise, Robert Teeter, managing director and chief investment strategist of Silvercrest Asset Management Group, said industrials and energy infrastructure are immediate beneficiaries of the bill. “It’s certainly a new fiscal cycle and a new fiscal stimulative cycle,” he said. The bill is boosting tax provisions designed to spur capital investment in U.S. manufacturing , such as full expensing for research and development and factory structures. He also highlighted that the tech sector stands to gain from incentives for R & D and productivity improvements, with benefits spreading from AI hardware providers to companies deploying the technology. His firm stayed overweight on equities through recent tariff-related volatility in anticipation of the bill’s passage, favoring technology, industrials, and small caps. Too optimistic? However, not all investors believe that the bill heralds that much of a positive change. Cody Willard, general manager of CL Willard Capital Partners, is less convinced that the OBBB is a transformational catalyst on its own. “I think that’s too optimistic,” said the hedge fund manager. “It’s more of a continuation of constant fiscal spending and infrastructure improvement promises from the U.S. Government.” The administration appears intent on “running it hot” with large deficits and lower rates, pushing the U.S. into “a state of fiscal dominance whereby monetary policy must remain servile to the Treasury’s funding needs,” said Sprott Asset Management market strategist Paul Wong. The likely outcome, Wong argues, is negative real yields, structural dollar weakness, and a shift toward real assets. “The long term winner is real assets, as the USD is heading lower. Long bonds are most at risk,” he said. Real assets include gold, oil and real estate. Sprott’s portfolios are “well positioned” in precious metals — both gold and silver — which the firm believes will continue to perform well in the current market environment. They also hold uranium, copper, and rare earths to capture geopolitical and energy policy shifts. Underweight sectors In fact, some sectors face clear downsides from the OBBB. One area investors are underweight on is clean technology. “Any investors that are looking at solar power, wind power, I think that probably will not be great positions to be in,” said Andersen. In a similar vein, Teeter said the sector “loses a lot of benefits in the legislation” and may lag in the near term. For one thing, the bill accelerates the phasing out of solar and wind projects via the clean energy production tax credit and investment tax credit, imposing much tighter deadlines for eligibility. On top of that, it introduces stringent “foreign entity of concern” restrictions, limiting eligibility for clean energy projects, if they are owned or materially assisted by entities from countries such as China, Iran and Russia. RBC’s Toh also said he believes that hospitals and managed care sectors face reimbursement pressures.
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