Spring is in the air—for both weather and markets.

The temperature in the New York Metro area was 55 degrees over the weekend, and you could actually go outside for a run. This balmy weather was especially reinvigorating considering that the thaw came a week after a stretch of some of the coldest days in a century. It felt like the weather gods had capitulated.

Global capital markets have that feel as well. After a horrific start to the year, when virtually every type of risk asset underperformed, things seem to be stabilizing a tad. While it may still be too early to declare an “all clear,” we should at least enjoy the respite. In fact, this may indeed be an opportune time to do a bit of planning.

In that vein, one of the most important questions that come to mind is the following: If things are settling down, where would an investor find the best value? By “best value” I’m not necessarily referring to the markets sectors likely to generate the highest return. Instead, I’m referring to the sectors that have cheapened the most relative to the direction of their fundamentals.

Here is my list:

a) Investment grade (IG) credit: While credit markets have been under pressure across the board, the performance of IG credit is probably the worst in relative terms. Credit quality is modestly weaker at best while spreads are at their widest level in recent memory (with the exception of 2008), even wider than during the recessions of the 1990s and 2000s. If things stabilize, high yield credit and loans may eventually provide better absolute returns, but IG credit should be the first to rebound vigorously.

b) Growth stocks: While credit assets have been under pressure for almost 18 months, the recipients of the biggest pummeling this year have been growth equities. This fact is especially galling considering that what the world needs more than anything else is economic growth. But lately, investors have shown a desire for bond proxies in the equity world (i.e., income-generating stocks). And despite the significant decline in growth-stock valuations, there hasn’t been a meaningful reduction in the fundamental characteristics of growth companies. It’s difficult for me to see how worldwide economic growth (especially in the United States) can stabilize and how capital markets can rally without a rally in growth-stock valuations.

c) Financial stocks: As I have written before, financials look extraordinarily beaten down. Banks in the United States and around the world have been facing enormous headwinds, with concerns about negative interest rates, credit fundamentals in developed markets’ energy and materials sectors, credit performance in emerging markets, and heavy regulatory burdens on banks’ capital. At current price-to-book ratios, bank stocks appear to exhibit very good value, especially since credit losses and provisions are likely to be modest at worst. In addition, one of the biggest anomalies about financials is that there probably isn’t a better bond proxy these days than financial equities in a world where investors are truly seeking out bond proxies, in yield terms.

d) Midstream MLPs: While stress in the energy markets has been self-evident for quite some time, the performance of midstream master limited partnerships (MLPs) has been like the proverbial baby being tossed out with the bath water. MLP shares have seen spectacular drawdowns without a substantial change in the operating performance of their underlying companies. If you have a long view and believe that the United States needs long-term energy transportation infrastructure—with or without fracking—it’s difficult for me to see how current valuations can be justified over the long haul. Lately, extremely low valuations have drawn deep-value investors.

e) Currencies: If U.S. growth ends up stabilizing (which is my premise), the recent decline of the dollar versus the euro and yen will have been nothing but spectacular. To a large extent, this decline has been driven by portfolio positioning, but the longer term trend, in our view, is still very much that of a strong dollar.

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