- Jim Paulsen, chief investment strategist at Leuthold, told CNBC on Thursday he sees “really strong momentum” entering the fourth quarter of 2020.
- The four types of stocks that he believes will gain in the next few months are cyclical stocks, small caps, international stocks and financials.
- He also said he believed the stimulus bill was “massive” and that its positive effects are only starting to show in the markets.
Jim Paulsen of Leuthold told CNBC on Thursday that there was “very strong momentum” ahead in the fourth quarter and stocks that benefit from this broader economic improvement will begin to take the lead.
“I’m not saying we’re not going to slow down,” the chief investment strategist said, “I mean we’re growing 30.35 in the second quarter. But I think we’re going to grow another 5-10% in the fourth. “
He added that the “massive” and “unprecedented” stimulus bill will take about a year to start working, and the market could see positive effects from the fourth quarter. The announcement of a successful vaccine in the fourth quarter or early next year will help boost recovery stocks.
“We are not going to stop this recovery,” added Paulsen.
Read more: Legendary investor Mark Mobius told us about his process of finding the hottest deals in distant markets around the world amid the COVID-19 crisis – and shared his top 5 stock picks right now
Four sectors of the market that will gain in the next few months are cyclical stocks, small caps, international stocks and financials, according to Paulsen.
His favorite cyclical stocks are industrials, and within international stocks he likes emerging markets. He also said he believes financial stocks will improve if the Fed starts to raise bond yields as the economy recovers.
“If I’m right about the macroeconomic picture and growth continues to improve, then I think the Federal Reserve and other policymakers around the world are going to have to give up on keeping bond yields low,” he said. he said, “and that would really improve financial stocks.”