There are two pivots taking place! The first has been underway for several months. Our stock market is broadening out from the narrow, mega-tech leadership that was in effect for the last few years. The new market leadership is much more diversified. Many of these companies are often categorized as value stocks and may be more sensitive to the business cycle.

The second pivot is coming from the Federal Reserve. The Fed is finally on the verge of retreating from its tight money policy with high interest rates. Investors expect rates to be modestly lowered in September with more cuts to come over the next few months. The bond market has already anticipated this, lowering interest rates on a variety of debt obligations. Even lower rates are coming.

With lower interest rates on the way, investors are more confident that our economy can continue to grow. Therefore, cyclical and value stocks should continue to lead the market higher. The former growth leaders aren’t going away, there are just many more attractive places to invest. The Bull has warned that volatility is likely to pick up. Do not let that obscure the strong underlying market trend. Opportunistically, pick up a few bargains and stay steady my friends.

– The Lonely Bull