On the similar time, the financial system is nowhere close to recessionary ranges. On Dec. 21, weekly jobless claims rose by lower than forecast, remaining close to historic lows and indicating a robust employment surroundings. As well as, retail gross sales knowledge for November beat forecasts, displaying that U.S. customers have been spending in the course of the vacation season. Add to that an ongoing revival on the housing entrance, as single-family homebuilding surged to greater than a 1-1/2-year excessive in November and stands poised to realize additional momentum within the 12 months forward.
In the meantime, there’s nonetheless a long-term catalyst brewing across the want for brand new housing for people. Decrease mortgage charges in 2024 may solely push this ahead. These arrows all level to an uptick in housing exercise in 2024.
Housing, in fact, is an enormous multiplier for the remainder of the financial system. In the event you purchase a brand new home, you’re additionally going to want new furnishings, new home equipment, possibly even a brand new automobile … you see the place that is going.
How I’m Investing Proper Now
Trying on the knowledge, now is an efficient time to optimize a portfolio to be able to revenue off a housing resurgence. Going into 2024, I stay bullish on firms with earnings momentum — benefiting from decrease inflation prices, pricing energy, restored inventories and secular demand. This contains know-how, industrials and discretionary names.
I additionally suppose the approaching election 12 months can have a big effect on client sentiment, in the end giving it one other increase. As I’ve been saying: Don’t wager in opposition to the U.S. client. So long as the roles market stays wholesome, I see client sentiment remaining robust. That is solely win-win for general company earnings and the financial system.
Alternatively, heading into 2024 I’m not as bullish on the mega-cap tech firms that have been an enormous driver of the S&P 500’s main rally in 2023. Expectations for a lot of of those firms are at exceedingly excessive ranges. Whereas I nonetheless anticipate them to carry out in 2024, I don’t anticipate to see a repeat of the outperformance that we noticed in 2023.
There additionally continues to be a disconnect within the capital elevating for the vitality area, as quite a lot of vitality firms are persevering with to push share buybacks and dividend applications. It continues to be a great place to be, as I don’t see commodity costs hovering except there’s an exterior issue, akin to a geopolitical incident that can’t be predicted. The underside line is general vitality continues to be a lovely area. It’s additionally an excellent diversifier for a portfolio.
Hightower’s Zachary Christopher, shopper portfolio analyst, contributed to this column.
Stephanie Hyperlink is chief funding strategist and portfolio supervisor on the nationwide wealth administration agency Hightower Advisors LLC. She leads the agency’s Funding Options Group. Observe Stephanie on LinkedIn and X. Learn her common market insights right here.