Where our experts are investing … the red flags they’re eyeing … the issues that could affect your portfolio … what to make of the Fed and rate cuts - Where are our experts putting their money to work here in the back half of 2024?
- What are they most concerned about as we look toward the end of the year?
- What will be the impact of the presidential election? And the likelihood of rate cuts? Or the frozen housing market?
Today, we’re going to find out how our experts Louis Navellier, Eric Fry, and Luke Lango are answering these questions and more. A few weeks ago, our Editor-in-Chief and fellow Digest writer Luis Hernandez held a Midyear 2024 Roundtable Discussion with Louis, Eric, and Luke It was originally intended exclusively for InvestorPlace’s Omnia subscribers (our highest level of membership with full access to all our services). But the content is so valuable that we felt it was important to make parts of it available to our broader Digest readers. So, today, I’m bringing you excerpts from the discussion to help you prepare and position your portfolio for the second half of 2024.
(To make it easier to read, we won’t do our traditional italicizing of quotes from our experts.)
Let’s jump in.
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Click here to see the details. | What are you most excited about to invest in today? And if it’s “AI,” what aspect of AI? Louis: What AI is doing to our power grid is scary because we don’t have enough power.
I go between Florida and Reno. In Reno, we have diesel generators every mile in our neighborhoods because the power grid can’t handle the air conditioning load…
You can’t add a new natural gas power plant because the Biden administration passed this law recently that you must sequester the carbon, and that’s an eight-year permit. So, energy is a nightmare in America now.
And so, the companies that are building the grids, as well as better software, are the place to be. A few we love are EMCOR, Eaton, and Quanta Services. Eric: I like the healthcare area.
My colleagues here are much more knowledgeable and broad-based in their application of AI-focused investments. But in the healthcare space, I really do believe there’s a once-in-a-generation opportunity to invest in the companies that are utilizing AI platforms to accelerate drug discovery and development.
That is a large category of stocks, but once you really drill in, it shrinks quite a bit – whether they’re small caps that actually have a widget that can develop new therapies versus just talking about it, or the larger-cap healthcare names that are both actively acquiring smaller biotechs that have great drug pipelines and collaborating in different ways with companies that have AI platforms…
We’re not even in the first inning really. We’re at the first out of a first inning. Luke: I’m looking at small caps that are sensitive to rates.
These companies don’t have billions upon billions on the balance sheet or else they would be a large cap, so they’re very rate sensitive. They get a lot of their funding from debt markets, so they’re exceptionally rate sensitive. They’re lagging because the Fed is keeping rates higher.
As soon as that changes…I think it’s going to be small caps doing a furious catch-up rally on the back of those cuts. So long as those cuts aren’t in response to a recession.
If the Fed is proactive in their cuts, then we get the broadening. Small caps have a catch-up rally, we get a ’98, ’99 style melt up in ’25, ’26. Have we really won the battle against inflation? Louis: The inflation problem is just Owners’ Equivalent Rent. We throw that out and everything’s fine. Luke: Yeah, we’re at 1.8% if you exclude that. If you exclude shelter CPI, CPI is 1.8%. Problem solved.
[Note: Luke’s comment was based on May’s CPI data, not yesterday’s June CPI numbers. As we noted in yesterday’s Digest, the latest housing data finally came in cooler than expected.] Eric: I want to jump in here because that is such an important point that I want to make sure that the people listening understand that point, so Luke? Luke: If you exclude shelter from CPI, it’s running at 1.8% and has been running below 2% for several months now. Louis: Wholesale prices on goods are very soft. They fell 1.5% percent in the past month. Some of that was energy-related, but service costs are down because there’s no Owners’ Equivalent Rent in the PPI.
So, there’s a lot of green shoots out there. What are you concerned about as you look at today’s economics/investment landscape? Luke: Housing.
I think the economy’s at the cliff. I really do believe we’re at the edge.
And when you look at the housing market – I just went through this buying a new home – the housing market is frozen. It is frozen solid. High rates and high prices cannot coexist forever. Housing is the backbone of the U.S. economy.
If you start to see housing prices roll over because of sustained high mortgage rates, the wealth effect’s going to kick in. People are going to really stop spending.
The only reason some people start spending is, “I got a lot of equity in my home. My home value’s up 100% since I bought it,” or whatever. If that starts to roll over and people feel shaky about their job, income and financial future, then things could get really bad. | ADVERTISEMENT  Louis Navellier is issuing a brand-new warning today… The next president of the United States will NOT be Joe Biden… And it won’t be Donald Trump.
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Click here now to see Louis’ warning. | How will the presidential election impact the market later this year? Louis: Elections are normally good for the market because both candidates promise us everything.
So, elections are usually good. Normally we rally going into the elections, and then we might have some regret for about a week or so, but then we get in the holiday mood and then we don’t care anymore.
But I will say I hate August… The weak point for the market seasonally is August and the first half of September.
So, there is a six-week period there. If we just go sideways, we’ll be fine, but then the second half of September is quarter-end window dressing.
And then in October we’ll get another round of earnings. Of course, we’ll have all the excitement over the election because change will be coming What’s the outlook for commodities? Eric: The oil market’s been doing pretty well, and the oil stocks, at least on a relative basis, have been doing really well…
You’re finally starting to see some supply deficits come into the crude market for the first time in a while. You’re also seeing it in the platinum and copper markets for the first time in a while. By the way, these things love interest rate cuts.
If you think the stock market likes interest rate cuts, the commodity markets really love them. So, I think that they’re also waiting for that to happen.
The fact that many commodities are doing well, even with rates high, suggests that there’s probably more strength there than most people give credit for.
So, I think we’re going to see selectively higher prices in some commodity markets. Gold is one of them, but that’s a different story. I’m very bullish on platinum in particular and also crude oil. What are your thoughts on the Fed and rate cuts? Louis: Unfortunately, I gave up on Jerome Powell…
Meanwhile, a lot of the people they’ve put on the Fed aren’t qualified so that’s another problem.
And the new Fed spokesman is Austan Goolsbee from the Chicago Fed, and of course Neel Kashari from the Minneapolis Fed. Those are basically the new spokesmen and they’re overpowering Jerome Powell right now.
So, he lost control of the Federal Reserve Board, and it just creates some uncertainty. Luke: The biggest risk that we’re facing right now is the Fed. We’re all hoping the Fed wakes up… Was it [Federal Reserve Board of Governors member] Bowman, Michelle Bowman, who came out [several week ago] and said, “No way we’re cutting rates this year. I’m open to hiking rates again”? Louis: Yeah, they have people in the Fed that are totally unqualified.
Luke: I’m just like, “Are you serious?” The only reason the economy’s staying up, the reason it’s not in a recession right now is because we’re looking forward to these rate cuts. Eric: I’m going to pivot to the happy side of the story, which is that for four or five months at least, each successive rate cut expectation has been dashed by the Fed…and the market headline number is still near all-time highs.
Meanwhile, the gold price is not far from its all-time high. And that’s with serial disappointments.
So, to your point, I feel like all that must happen is just no more disappointments. The Fed doesn’t have to be super aggressive on cutting rates. You just have to signal that it’s going to happen, clearly signal it. | ADVERTISEMENT  Legendary trader Tom Gentile predicted the rise of Artificial Intelligence more than five years ago and gave his readers a chance to turn $10,000 into…
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He’s now issuing this critical AI warning for the next 30 days. | Jeff here again… We’re going to end things here to keep today’s Digest from running too long.
But before we sign off, “thank you” to Louis, Eric, Luke, and Luis for letting us piggyback on your roundtable discussion.
Also, we’d like to congratulate Louis’, Eric’s, and Luke’s subscribers on some recent wins. In Louis’ Growth Investor service, subscribers just took profits on three stocks, led by Celanese Corporation (CE) with its 57% gain, including dividends. Longtime subscribers are also sitting on an incredible 2,975% return with Nvidia (the position remains open). Meanwhile, earlier this week, Eric’s Investment Report subscribers banked more than 100% returns on both Alphabet and Amazon.
And over in Luke’s Innovation Investor service, the last few weeks have brought subscribers a slew of profits. ASML Holdings at 53%... Taiwan Semiconductor at 75%... Sea Ltd at 80%... and Fabrinet at 415%... Congrats to everyone on your wins.
We’re thrilled to partner with you in helping you achieve your investment goals, and we look forward to bringing you more analysis from our experts in the back half of 2024. Have a good evening, Jeff Remsburg |
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