Lewis Charles UK Equity Strategy: Sell a bounce into non-cyclical value

The UK economy is likely headed into a recession. 67% of economists now  believe the UK will go into recession within the next year and this number  has been rising.
At 9.5x Earnings the UK market is cheap and may already be discounting further earnings downgrades, however it has been cheaper in the past, note Lewis Charles Securities analysts in a research note dated October 3.
Defensive sectors have already seen a run up in valuations as the market has sold off, but Tobacco, Pharma, Beverages, and some Retail names still offer defensive qualities at a reasonable price. However, Beverages could see some short term weakness.
In Pharma, Lewis Charles analysts like Glaxo and AstraZeneca. In Tobacco, LC analysts like both British American and Imperial, but prefer BATS purely on a valuation basis.
In Retail, the Low Cost Staples Providers such as Tesco and WM Morrison are preferred.
Although banks have devalued from a price to book level 2.4x in November 2006 to just below 1.0x currently, sector valuations usually trough at 0.6x
Lewis Charles analysts say we are likely to see stocks sell off further in a recession, but think a sell off might be somewhat short-lived as we have already sold off to a degree
that suggests that further earnings downgrades are already factored into the price of the general market.