Forget the Talking Heads: It’s Time to Buy as Stocks Soar to Record Highs
Turn on the television, and you are likely to find someone discussing the economic recession that never happened. The economy is on the brink of collapse, they say, and stocks are set to crash and burn as they did in 2008…
If you have not already, you need to stop listening to those talking heads now.
The stock market has recoded six straight record high closes.
That’s no fluke.
The smart money on Wall Street isn’t listening to the pessimistic talking heads. They are looking at the data, and they’re seeing the economy is in the midst of a massive turnaround, not teetering on the brink of a recession.
It is not time to sell stocks in preparation for a market meltdown. It is time to buy stocks in anticipation of a market melt-up in 2024.
Consumers Are Propping Up the Economy
Consider the Personal Consumption Expenditures (PCE) report released yesterday.
It showed that real personal spending rose 3.2% in December. Excluding COVID, that is one of the highest personal spending growth rates of the past decade. It also continues a multi-month uptrend in real personal spending rates that started in late 2022.
The consumer is strengthening and running at essentially decade-highs – which is great news for the economy because consumer spending drives 70% of U.S. economic activity.
When consumers are spending, the economy is thriving.
That’s what we have right now.
At the same time, the PCE price index rose just 2.6% in December. The core PCE price index rose just 2.9%. Both of those number are below 3% for the first time since early 2021. Both are expected to fall again in January, with the Cleveland Fed estimating a PCE inflation rate of just 2.2% and a core PCE inflation rate of just 2.6% in January.
Inflation is collapsing and has essentially returned to normal levels.
You could also look at yesterday’s Pending Home Sales Report. It showed that pending home sales jumped 8.3% in December, when economists were expecting a mere 2% rise.
Or you could look at yesterday’s Kansas City Fed Services Survey, which showed that business conditions among services companies in the Midwest improved significantly in January.
Anywhere you look, the data will tell you the same thing: The U.S. economy is turning a corner.
That’s why stocks are soaring to all-time highs.
The Final Word
Wall Street is a lot of things. But it is not stupid. The big wigs on Wall Street know that the economy is turning a corner and that is why they are pushing stocks to new high after new high.
Don’t doubt this rally. Don’t be afraid of it. When the next dip emerges, buy it. Thanks to a strong economic rebound, stocks are positioned to rally for the next few years.
As the economy pivots to a new era of prosperity, we’ve done the legwork to identify the stocks that will lead the charge and allow you to benefit from this sustained market rally.
Which is why we’ve been buying quite a few stocks over the past few weeks.