On the identical 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 setting. As well as, retail gross sales knowledge for November beat forecasts, displaying that U.S. shoppers 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 achieve 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 might solely push this ahead. These arrows all level to an uptick in housing exercise in 2024.
Housing, after all, is an enormous multiplier for the remainder of the financial system. If you happen to 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.Â
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 corporations with earnings momentum — benefiting from decrease inflation prices, pricing energy, restored inventories and secular demand. This consists of expertise, industrials and discretionary names.
I additionally suppose the approaching election 12 months can have a huge impact on client sentiment, in the end giving it one other enhance. As I’ve been saying: Don’t guess 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.
Then again, heading into 2024 I’m not as bullish on the mega-cap tech corporations that have been an enormous driver of the S&P 500’s main rally in 2023. Expectations for a lot of of those corporations are at exceedingly excessive ranges. Whereas I nonetheless count on them to carry out in 2024, I don’t count on 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 house, as a variety of vitality corporations are persevering with to push share buybacks and dividend applications. It continues to be a very good place to be, as I don’t see commodity costs hovering except there’s an exterior issue, comparable to a geopolitical incident that can’t be predicted. The underside line is general vitality continues to be a gorgeous house. It’s additionally a fantastic 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. Comply with Stephanie on LinkedIn and X. Learn her common market insights right here.
