Investors should be owning things beyond tech, says Hightower's Stephanie Link

Economic Outlook - The Atlanta Fed tracker estimates Q3 GDP growth at approximately 39%, following a 38% growth in Q2 [2] - New home sales experienced a significant increase, rising 20% month-over-month and 15% year-over-year [3] - The market anticipates potential sideways movement in the short term, but expects a positive earnings outlook for the next quarter and Q4 overall [4] - The economy could slow to 25%, but the earnings picture will still be good [21] Labor Market Analysis - Weekly jobless claims are a key indicator, with current levels around 230000 per week based on the four-week moving average, considered healthy [2] - An increase in weekly jobless claims to approximately 250000-260000 would raise concerns, while recession levels are typically around 350000-375000 [17] - Wage growth is currently around 5%, supporting consumer spending [18] Investment Strategies - The market suggests owning stocks beyond the tech sector, highlighting housing and autos as potential recovery areas with lower interest rates [6][7] - Financials, particularly large-cap banks, are expected to perform well, with Morgan Stanley raising targets due to strong numbers and relatively cheap valuations [7] - The industrial sector and data center investments are expected to continue performing well with good visibility [8] - Cyber security is in early stages and driven by AI, consolidation is expected in the sector [11][12] Company Specific Recommendations - Capital One is favored due to its acquisition of Discover Financial, creating a scalable payments network, with potential earnings power of $26 per share and excess capital for shareholder returns [9][10] - CrowdStrike and Palo Alto Networks are recommended in the cyber security sector, despite CrowdStrike's higher price-to-sales ratio of 27 times, while Palo Alto is cheaper at 14 times [13] Monetary Policy Impact - The anticipated lowering of interest rates by the Federal Reserve is expected to shift money from money market accounts into investment opportunities [14] - Approximately $75 trillion is currently held in money market accounts, with a portion expected to seek better yields as rates decrease [15] Risk Factors - The labor market is the primary concern, with weekly jobless claims being a key indicator to watch for potential economic softening [16] - A government shutdown is not considered a major concern, with expectations of a short-lived impact and potential buying opportunities [19][20]