Some Stocks I like and current thoughts on the market

We got a 50 bps cut, congratulations. The money has already started to flow and rotate into some more rate-sensitive stocks such as Zillow, which is up 4% today. I thought the cut should’ve been 25 bps and that a slow steady pace of easing was the way to go. I see the consumer as healthier than the media reports and that they are just looking for value and bang for their buck. It will be up to the companies to start cutting prices and offering consumers more deals. A recent quote from Walmarts Q2 2025 earnings sums this up, “So far, we aren't experiencing a weaker consumer overall. Around the world, our customers and members continue to want four things. They want value.”

Dollar Tree Q2 2024 earnings call, “In this environment, retailers who can offer products to provide value and convenience to pressured consumers are the ones who will take market share and grow sales. We believe we are and will continue to be one of those winning retailers.”

Consumers were questioning whether fast food was still worth it until McDonald’s did the right thing by offering a $5 meal deal. They recently just extended it, and that pushed up their stock price.

Alternative Asset Managers

My thesis is simple: Treasuries were giving investors enough yield to the point where they didn’t need to allocate money to these managers. With the rate cut, risk assets have become more attractive and even GPs have expected deal activity to bounce back according to a survey done by EY. Firms will see more inflow of capital from LPs and GPs are eager to put the capital to work.

$KKR, $ARES, $BX

Small Caps

The Russell 2000 is trading at the cheapest valuation compared to the S&P since 2001. I see the rotation that ended so soon in the summer, coming back. Small caps need to show investors that they can increase earnings since it’s something that they haven’t been doing as “The Russell 2000’s aggregate profit declined 10% year-over-year in the second quarter” according to Investopedia. Although I think this will happen sooner than later, these two small-cap stocks I list below I think have a solid path to driving profits that separates them from the rest of the pack.

$LWAY, $RCAT

Lifeway thesis posted on July 22,

Red Cat is an event-driven trade I like because of the risk-reward; drones are the future of warfare, and with all the geopolitical tensions going on, I see them benefiting even if they don’t win the contract. The US Government contract is down between them and a private company. It should be announced before the end of the fall, but we will get more commentary from their earnings report next week, where they expect to post revenue of $3.85 million and GAAP net income of -7.07 million.

Overall, so far, we’ve seen massive inflows of capital pushing stock prices up, and the Dow and S&P have hit record highs. China stocks are even getting some love, which is something that hasn’t happened in a while, $BABA and $PDD are up 4.82% and 1.78%, respectively. The pessimist in me thinks that this might be a little too optimistic, though, as we are playing in a macro-sensitive market. All it takes is one bad piece of data to send it all down; momentum is essentially your margin of safety in this market. Maybe the Fed is just “kicking the can up the road,” and inflation will continue to increase.