Consumers Keep Spending and Small Caps Are Poised to Rise
Resilient U.S. Consumer Drives Economic Growth
Legendary investor Louis Navellier emphasizes the resilience of the U.S. consumer, a sentiment supported by recent retail sales numbers. In September, retail sales exceeded forecasts, showcasing strong consumer spending that continues to fuel the economy. With consumer spending accounting for nearly 70% of the nation’s GDP, the robust numbers indicate a healthy economy.
– Retail sales increased by 0.4% in September.
– Excluding autos and gasoline stations, sales climbed by 0.7%.
– Inflation has been falling, contributing to a positive economic outlook.
– The Atlanta Fed’s GDP Now model estimates Q3 growth at 3.4%.
Small Caps: A Lucrative Investment Opportunity
Louis Navellier and Jason Bodner are bullish on small-cap stocks, particularly in the current market environment. Small caps tend to benefit significantly from lower interest rates, making them an attractive investment option.
– Small-cap stocks are outperforming larger-cap stocks.
– Seasonality, the presidential election, and strong Q3 earnings are additional tailwinds for small caps.
– Big Money traders are increasingly active in the small-cap space.
The Big Money Indicator for Small Caps
Jason Bodner’s analysis of the Big Money indicates a strong interest in small-cap stocks. With the Fed expected to continue cutting rates, the outlook for small caps remains positive.
– Over the last three months, 81% of Big Money buy signals were in stocks with market caps of $50 billion and under.
– The S&P 500 historically rallied 26.8% over two years when the Fed lowered rates.
– The Russell 2000 surged 36.6% on average over the following two years during rate cuts.
Retirement Accelerator Window for Small Caps
Jason Bodner identifies the current period as a “retirement accelerator window” for top-tier small caps, with the potential for significant returns over the coming months.
– Small caps have historically outperformed during rate cuts and economic stability.
– Investors can capitalize on the historical outperformance of small caps by including them in their portfolios.
In conclusion, the combination of resilient consumer spending, falling inflation, and lower interest rates creates a bullish environment for small-cap stocks. Investors looking to maximize their returns should consider the opportunities presented by small caps in the current market landscape.