Gina Martin Adams' Guide to Volatile Equities

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Aug. 13 (Bloomberg) -- Gina Martin Adams, senior U.S. equity strategist at Wells Fargo, discusses her equity investment strategy and her concerns over the impact of a policy change from the Federal Reserve. She speaks on “Bloomberg Surveillance.”

Dow 17,000, still many butts.

I congratulate you on being out front about being a cautious poll.

Give us an update on the level of enthusiasm to be in the equity market.

I hate to say it but i am still relatively cautious because of the uncertain impacts of the fed removal of policy.

So many of the viewers rightly to say gina is dead on, that is exactly how i feel.

If i feel like tina martin adams, how do i act?

What is the to do list?

We focus on companies that are producing revenue growth.

Companies that are likely to produce accelerating and earnings growth -- acceleration.

Companies that are provided lower p/e ratios.

Reasonable value.

So i think there are opportunities still in the index.

Is it a broad call and hold it?

No, because i think at this point we are likely to experience a little bit of a chop.

Can you buy energy based on the framework?

You can buy some of the energy.

We have market weight on the energy sector mostly because earlier this year energy was hot and probably got a bit overbought.

Wait for a better opportunity.

This goes to utilities.

They got hot for a while.

Very hot because rates did not go up.

If that what kept it under the fact that rates got low.

Utilities is even more dangerous than energy.

There is a broad swath of companies that were also avoiding.

These are the interest-rate sensitive segments.

Utilities is one of those because historically a very close correlation to 10 year treasuries.

When rates go outside for utilities -- which is bad for utilities.

The worst-performing and the last three months.

Very volatile sector.

That is because of the movement and uncertainty with regards to where it is going here.

Where do you have overweight?

, materials.

Is a blowing -- blowing away estimates.

So much skepticism with respect to health care.

Rex and to what extent obamacare has artie been priced in.

It has just been outperforming so it is one of our favorites.

What is material stock, the wall in my suit?

-- the wool in my suit?

Mostly chemicals.

Chemicals are the biggest.

Also, metals and mining.

The ocalan is of the world.

Why are they benefiting it is you are expecting gdp worldwide to pick up?

A combination of things.

Part of the material sector benefiting because we see in -- growth in production.

They have cut to near zero the balls.

So as soon as we see modest pickup that benefit.

Within the conversation, you go to the heart of the matter, the dynamics of the income statement.

How much more can they cut?

Are companies running so efficiently there is no more to do on the income statement?

There is very little left to cut.

Ebitda margins have been falling.

What is holding up margins are interest, taxes.

So what we have to see is revenue growth comes through.

That is why it is the big theme for this year.

Little-known but the reality is financial engineering has driven a lot of earnings.

It was like emerson lincoln.

Everyone had hair down to hear.

Eva.

Margin and then vampire weekend.

I am amazed where we go from here.

Dow 17,000. you have been in the market.

Others have been more bullish.

Others have been more right than you.

Do you feel like you are lagging behind?

So far i have been lagging behind.

The evidence is pretty clear we have not been bullish enough.

This tension is you were not all cash.

Not at all.

Most of my clients are involved in the equity markets so a matter of how you beat the benchmark.

Exit is important.

-- this is important.

You are either 100% in the market or all in cash.

The real world is they have to be in the market.

You have to tie yourself to the s&p 500. there are a lot of strategies for being long and index.

Tina martin adams, thank you so much.

We will continue.

-- gina martin adams.

Apple releasing data on the diversity of the workforce.

We will tell you how it compares to other silicon valley companies.

This is bloomberg "surveillance."

This text has been automatically generated. It may not be 100% accurate.

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