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Why Hedge Funds Have a Dull Outlook on the Market in 2H17

PART:
1 2 3 4 5 6 7 8 9 10
Part 9
Why Hedge Funds Have a Dull Outlook on the Market in 2H17 PART 9 OF 10

What Could Stimulate the Industrial Sector in 2H17?

Industrial sector

The industrial sector also remained a stronger player in the first half of 2017. The Industrial Select Sector SPDR Fund (XLI), which tracks the performance of the industrial sector, rose 8.8% in 1H17. On a year-to-date basis, the sector returned 7.7%, as of August 28, 2017.

What Could Stimulate the Industrial Sector in 2H17?

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The higher fiscal stimulus could be an important driver for the industrial sector in the second half of 2017. The higher fiscal stimulus will stimulate the infrastructure sector. The development in infrastructure will increase the demand in the industrial sector. The earnings growth of the industrial sector needs to improve further in the second half of 2017 to support the higher market price of this sector.

Billionaire investor Mario Gabelli is a strong player in the infrastructure space. He has made sizable investments in Mueller Industries (MLI), United Rentals (URI), and HERC Holdings (HRI). He said in an interview with CNBC in April 2017, “Infrastructure is important because it helps fiscal stimulation. It offsets monetary policy. It helps the jobs in the middle of the country. It helps everyone.”

Major holdings of the industrial sector

Major holdings of the XLI ETF such as General Electric (GE), Boeing (BA), 3M Company (MMM), and Honeywell International (HON) returned nearly -14.8%, 25.8%, 16.9%, and 14.7%, respectively, in the first half of 2017.

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