The nation is dyspeptic about the forthcoming presidential election. Polls show that few Americans want a rematch between Donald Trump and Joe Biden, but it appears that’s exactly the contest we’re getting for the most powerful job on the planet.

No matter who wins, we seem headed for a “Weekend at Bernie’s” presidency. Perhaps instead, a special commission should just pick random names from the phone book.

However, on at least one topic, there’s growing optimism: inflation. The tide is finally turning in the battle against rising prices, as underscored by key inflation data released on Thursday.

The beleaguered incumbent in the White House isn’t getting much credit for cooling inflation (nor any credit for much else), but decelerating inflation seems here to stay. Investors are cheering, as the main equity indices continue to hit new all-time highs.

The U.S. Bureau of Labor Statistics (BLS) on Thursday released the consumer price index (CPI) for June, showing that the CPI fell 0.1 from May, putting the 12-month rate at 3%, roughly its lowest level in more than three years. The all-items index rate fell from 3.3% in May and was flat on a monthly basis.

Excluding volatile food and energy costs, so-called core CPI climbed 0.1 % monthly and 3.3% from a year ago, compared to respective forecasts for 0.2% and 3.4%. The annual increase for the core rate was the smallest since April 2021 (see chart for a breakdown by categories).

The recent deceleration in CPI growth, coupled with Federal Reserve Chair Jerome Powell’s relatively dovish stance on Capitol Hill this week, paints a bullish picture for investors in the second half of 2024.

Powell’s remarks in front of the Senate on Tuesday and the House on Wednesday signal more accommodative monetary policy. You should always remember that liquidity is the lifeblood of markets, and the Fed largely controls liquidity.

The Fed’s willingness to potentially cut interest rates at least once, and possibly twice, in 2024 underscores a commitment to supporting economic growth. Thursday’s favorable CPI data strengthens the hand of monetary doves.

Monetary easing not only assists the economy, but it also tends to boost equity markets as investors seek higher returns in a lower interest rate environment.

Despite a deceleration in CPI growth, the economy remains robust. A slower but still strong economy provides a solid foundation for corporate earnings growth. Businesses can continue to expand, albeit at a more sustainable pace, which mitigates the risk of overheating and subsequent market corrections.

That said, the main U.S. stock market indices closed mixed on Thursday, as investors pocketed profits amid concerns about overvaluation. The indices finished the trading session as follows:

• DJIA: +0.08%
• S&P 500: -0.88%
• NASDAQ: -1.95%
• Russell 2000: +3.57%

The small-cap Russell 2000 surged as economic optimism gained traction. The benchmark 30-year U.S. Treasury yield fell 1.48% to settle at 4.40%.

Benefiting Sectors

As H2 unfolds amid the conditions I’ve just described, you should emphasize these sectors:

Technology. With lower interest rates, the tech sector stands to benefit significantly. Reduced borrowing costs enable tech companies to finance innovation and expansion more affordably. Investors often turn to tech stocks for their growth potential in a low-yield environment.

Consumer Discretionary. As inflation eases, consumers have more disposable income, boosting demand for discretionary goods and services. This sector, encompassing retail, travel, and entertainment, is poised to see increased revenue and profitability this summer and throughout the year.

Real Estate. Lower interest rates make mortgage financing cheaper, stimulating demand for residential and commercial properties. Real estate investment trusts (REITs) can also benefit from the lower cost of capital and increased property valuations. REITs were laggards in 2023; they’re positioned to be leaders in H2.

Financials. While banks might see a slight margin compression from lower interest rates, the overall positive economic outlook and increased borrowing activity can drive growth. Financial services firms involved in mergers and acquisitions, as well as investment banking, can see heightened activity.

Second-quarter 2024 earnings season kicks off this week, with operating results from the big banks due on Friday. These reports from bellwether financial firms will set the near-term tone for the market.

Green Energy Transition. One sometimes underappreciated investment theme that aligns well with current economic conditions is the embrace of decarbonization. As inflation cools and interest rates normalize, governments and corporations are likely to accelerate investments in renewable energy infrastructure. This trend is driven by both regulatory pressures and the long-term economic benefits of sustainable energy solutions.

Promising green sub-sectors include renewable energy producers, energy storage, electric vehicles, and energy efficiency solutions.

Tapping into the green energy transition as an investment theme offers a compelling opportunity to participate in a transformative mega-trend.

A different kind of green…

Another promising mega-trend is marijuana. Yup…marijuana. It’s no longer considered “the devil’s lettuce.” Wall Street views weed as the green rush.

WATCH THIS VIDEO: Rocky Mountain High! Spotlight on Pot Bellwether Colorado

Why are certain cannabis stocks jumping +1,000%? It has to do with seasonality…specifically, the U.S. presidential election.

It happens every four years. No matter who’s running for office. During the previous presidential election cycle, you had a chance to grab 569%… 1,020%… 2,426% and higher. Now it’s happening again, and you’ve no time to lose.

I’m the editorial director of Investing Daily. I’m also the editor-in-chief of our premium trading service Marijuana Profit Alert. To find the best cannabis stocks, you need to conduct due diligence.

The good news is, I’ve done the homework for you. For Marijuana Profit Alert, I’ve put together a portfolio of the best-of-breed marijuana equities. These holdings are poised to soar during this political season. If you’re fortunate enough to own these companies, you’ll reap a windfall.

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