Defensive Names Still Catching Bids

 | Jun 12, 2013 | 3:42 PM EDT
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I am not crazy about today's action. Hated that opening. Hated it. Way too many people are leaning the wrong way and we know that it is hard to mount a rally when you are in the hole from 10:00 a.m. on.

To me, you still should be in a raise cash mode on anything that's cyclical. I don't care much for oil right now either.

The defensives, though -- the ones that rally when we are going into a recession -- are still catching bids because there is going to be a fear of recession if rates keep going up. I want to buy Merck (MRK), Johnson & Johnson (JNJ), General Mills (GIS) and, yes, Bristol-Myers Squibb (BMY) on any weakness.

Now, let's go back to my view that the macro ultimately won't will out. I think that people have to be more defensive and I sure as heck don't think we are going into a recession. I just think that when we get closer to earnings, people will be petrified that the CEOs are going to talk about the interest rates going back up and how much it could hurt.

I also think that the losses are going to be so great in these bond funds that we are going to see more selling in those funds. That will elevate rates even more and many institutions are not set up for that. They were still thinking that Bernanke was in control. He's not right now, deliberately or not. That's the big change and it isn't going back to the way it was.

Finally, I think the emerging markets are still perilous and if you have exposure to those markets, you are whistling past the graveyard.

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