Stephanie Link on Market Trends: Buying Volatility and Attractive Non-Tech Sectors

Market Outlook and Seasonal Trends

• 🗓️ Historically, August and September are typically weak months for the market, with September down about 2% on average over the last decade.
• 💡 Despite seasonal weakness, the advice is to buy into the volatility, as October historically performs well, averaging a 2% gain.
• 📈 The fourth quarter setup is expected to be strong, often being the best of the year, with many companies available at a discount.

Economic Indicators and Fed Policy

• 📊 The economy has shown growth at 2.5%, and earnings have exceeded expectations, largely driven by strong margins.
• ⚠️ While PPI numbers were high, a significant portion was due to portfolio management fees, and progress is being made on shelter costs within CPI.
• 📉 Despite inflation concerns, the probability of the Fed cutting rates by 25 basis points in September remains high (94%).
• 💼 Weekly jobless claims continue to be strong, indicating a resilient labor market.

Tariffs and Economic Strategy

• 🎯 Tariffs are discussed as a strategy to generate revenue and encourage onshoring/reshoring of manufacturing and jobs.
• 💰 While tariffs can act as a regressive tax passed to consumers, they also contribute to government revenue, which is built into the budget.
• 🏭 The onshoring and reshoring theme has benefited industrial companies exposed to data center, grid, and power sectors, with many of these stocks performing exceptionally well.

Market Opportunities Beyond Tech

• 💡 While tech stocks may not be the primary focus, other parts of the market remain attractive and offer opportunities.
• 🚀 Companies involved in industrial sectors, particularly those with exposure to data center and grid infrastructure, have seen significant gains and may present further opportunities.
• 📈 The market is viewed as a forward-looking indicator, and current trends suggest underlying strength despite short-term volatility.