This market play may spell profits chiefly due to vaccine optimism

Allianz Global Investors’ Mona Mahajan won’t rule out market consolidation over the next several weeks.

But she’s painting a bullish long-term picture that’s chiefly tied to a key advancement on the coronavirus front.

“We’ve had tremendous vaccine news,” the firm’s senior U.S. investment strategist told CNBC’s “Trading Nation” on Tuesday.

Since yesterday’s encouraging vaccine announcement from Pfizer and BioNTech, the Dow jumped 4% while the S&P 500 gained 1%. Meanwhile, the Nasdaq fell 3%.

She believes the environment sets the stage for sustainable rotation into groups that benefit the most from a widespread economic reopenings.

“We’re seeing now the cyclical value trade have some legs,” said Mahajan, who oversees $600 billion in assets under management.

However, it’s coming at a cost to 2020’s high flying mega cap names.

“That tech growth and secular growth themes are all lagging here — that stay-at-home trade, in particular,” she added.

It doesn’t surprise Mahajan, who has been largely avoiding the space.

Last July, she warned on “Trading Nation” the bullish activity in the stay-at-home trades was temporary. She predicted any meaningful news on the vaccine front would abruptly reverse the rotation back into cyclical groups.

“We always thought that the broadening of participation would occur once we did get a vaccine solution in place,” said Mahajan, who sees infrastructure, clean energy, 5G and robotics among the notable winners over the next 12 months.

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