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Negative Rates Point to Consumer Staples Stocks

The JP Morgan international bond index currently shows ~25% of gov’t bonds are in negative interest rate territory. More importantly, the size of the negative rate gov’t bond market has grown rapidly -- and dramatically -- from zero in mid-2014 to more than US$6 trillion today.


What happens to the risk ladder in asset-based investing with negative rates? It lights a fire under stable-growth, dividend-paying defensive stocks!

Believe it or not, of late, the MOST attractive defensive top-down S&P 500 sector has been Consumer Staples.

With no end in sight for negative government bond rates, investors should investigate holdings in defensive sectors of the S&P 500. When the U.S. 10-year Treasury bond trades at a +1.7% annual rate, Consumer Staples stocks oftentimes can offer a dividend rate well above +2.0% annually. These companies also can generate annual EPS growth above +7%, to top it off. In short, your stock portfolio will couple together two ‘safe-haven’ U.S. economy-based investment fundamentals. These can work hard for you.

The Zacks system shows the current top Consumer Staples industry is Consumer Products-Misc. Staples.

· The 9-company strong Misc-Staples space shows seven of nine share tickers get a Zacks #2 Rank (Buy) at the moment.

· That adds up to a stellar #8 out of 265 Zacks Industry rank.

· There have been 11 positive EPS estimate revisions of late, and 0 negative revisions.

You can’t find a better defensive U.S. stock niche to mine… right now.


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