What’s Boosting The U.S. Economy? Small Business & Millennials
The markets are fickle.
And to the untrained eye, it can be hard to see that a strong economic boost is growing right in front of us.
- Small businesses. Right now, small businesses make up over 67% of all new jobs in the United States. This means they are the foundation of our nation’s economy.
- Millennials. The ever-growing demographic of younger generations is making a big splash in the economy, boosting industries such as homebuying, electric vehicles and, of course, local shopping.
The key to growing the economy depends on this twofold market boost.
We’re in the friendliest environment for small business we’ve seen for nearly 20 years. At the same time, we have millennials entering their prime spending years. This is a double whammy that you don’t want to miss out on.
Amber Lancaster’s Market Talk Insights
Last week we saw a key reading measuring the optimism of U.S. small-business owners from the National Federation of Independent Business. Their Small Business Optimism Index rose higher to 102.4, more than economists’ estimates and an increase from September which had a reading of 101.8.
This index is comprised of a survey of more than 1,600 small-business employers. The recently announced, phase one U.S. trade deal helped push this index reading higher last week. In all, as this snapshot shows you, 23% of small-business employers surveyed think that it’s a good time to expand, 18% anticipate further job creation and 29% foresee increased capital spending.
To emphasize the importance of small businesses’ big impact on the U.S. economy, please check out this graphic from the Small Business Administration and the U.S. Census Bureau. You can see that small businesses account for 99.7% of all U.S. businesses. They’ve created 66% of net new jobs since the 1970s.
Money spent at local businesses generates 3.5 times more wealth for the local economy and 54% of U.S. sales. With the impactful statistics I just read, I want you to remember Saturday, November 30, will be the annual Small Business Saturday. It’s a day where we can aim to support our local businesses in our communities and #ShopSmall.
Personally, I do all I can to support local small businesses. One way I do this is by positive Google reviews for businesses that show fantastic service and offer an overall great shopping experience. I, like many people, want to see small businesses succeed.
Our question of the week this week will be: Are you going to be shopping on November 30 for Small Business Saturday and supporting small businesses in your local community?
Should We Expect an Economic Boost Soon?
Now for my innovation story of the week competition in the electric vehicle (EV) market continues to heat up. Here at Bold Profits, Tesla reigns supreme, but I would be remiss not to mention the latest entrant into the EV market. Ford unveiled the all-electric Mustang Mach-E SUV. Check out these photos. I think it looks pretty snazzy. The GT performance version of the EV Mustang will have about 459 horsepower, run on a dual electric motor making the car all-wheel drive and go from zero to 60 in about 3.5 seconds.
Reservations are currently being taken on Ford’s website. The entry level price starts around $43,000 and its first model will be available for purchase in late 2020. Ford, like many longstanding carmakers, is investing heavily in the electric and hybrid car market.
Elon Musk welcomes the competition. As you see in this tweet he sent to Ford last night: “Congratulations on the Mach-E. Sustainable electric cars are the future. Excited to see this announcement from Ford as it will encourage other carmakers to go electric too.” Ford responded with, “Thanks, Elon. We couldn’t agree more. See you at the charging station.”
More Market Talk
I agree with Amber about buying local. I always try to buy local, but only if they are giving me a better experience than the alternative. For instance, I never go to Starbucks because I think the coffee is terrible. I always go to whatever local one is in the area and it’s usually a lot better.
This week I read an article in Barrons with Morgan Stanley’s Colin Stewart who runs their IPO desk. He spoke a lot about direct listings. What he is saying is that venture capital (VC) who own these companies are very optimistic about them. They’ve been reluctant to sell their stock. They’ve been floating a small number of shares when they go IPO.
It’s not enough for the institutions to buy, so the institutions are getting behind these direct listings where they sell larger blocks and it’s not locked up. They are selling directly to the market instead of issuing new shares. Colin expects five direct listings next year.
I think we’ve had two big name ones — Spotify and Slack — in the last couple of years. Five in the next year would be an outlier and maybe the start of a trend. That’s something to watch. Also interesting in the interview, I don’t know if he reads our stuff but we’ve been using a phrase and term that he used in his interview.
He said that investors have shifted after the WeWork IPO failed where they went from an attitude of giving large amounts of capital for these companies to grow and capture market share at any cost, to an idea where the market wants to see a path to profitability.
A path to profitability is something that we have talked about and have been breaking it down for months. We keep hammering it and explaining what we mean by that. It’s good to see the market is also catching up to that and Morgan Stanley is talking about it too. They market wants to see this path to profitability. Does that mean that there is an economic boost looming?
I’m not sure he listens to us or reads us, I’m not saying that. It could just be the hive mind of the internet and sharing ideas. You don’t know where you get your terms or ideas, but it’s interesting nonetheless that we’re all on the same page. We’ve gotten that part right.
The other interesting thing I read this weekend is that Uber’s director, Ronald Sugar, bought $1 million worth of stock after third quarter earnings. That’s a positive endorsement I think. Then I read about UBS’s Private Wealth high-net-worth clients are 21% in cash. This strikes me as pretty high. They are very cautious and there’s some money there waiting to be deployed.
Paul Mampilly’s Thoughts On The S&P 500
Last year this time we were on the verge of a huge breakdown. The S&P fell nearly 20%. For what exactly? We don’t really know. There were a lot of theories put out there: higher interest rates, trade wars, inverted yield curve, impeachment. Today, I think people have given up on the bad news scenarios.
However, I am looking at MarketWatch as I say this and I see that it says, according to MarketWatch, 28,000 may be the level where everything tops out. I just want to make it clear, we are still optimistic. We still believe markets are going to go higher. It was an unpopular view last year as markets went down.
We got a lot of, let’s just say, not so nice email as that happens. It’s interesting to see that the flood of email on the reverse side is a lot less. Nonetheless, I’m thrilled that a lot of our readers stuck around. As a result, they are seeing new highs in a lot of new stocks, stocks that we own. We are still optimistic.
As Amber mentioned, we really have not had a friendly small-business environment in 20 years. The key to having money turn over where it goes from person to person, which is key to rapidly growing economies, we have not had. We have had no velocity of money for a long time.
For that, you have to have demographic growth, small-business growth and I believe we have that. This is why I’m incredibly positive about our stock market, our economy and where our country is going. I’m thrilled overall.
Profits Unlimited Stock Picks for The Week
Once again, we are going to be releasing a trade coming out early next week. While I cannot give away too much about the trade I can say the last time we put a trade like this on the stock went up 100% in two weeks. That’s because this was a stock that was heavily shorted, a lot of people were betting against it.
It was a biotech company, which has an FDA approved product. It’s under $5. It’s an incredible stock. I believe that stock still has a lot more to go. This could be stock number two that could do the same thing or even better. If you want in on that we’re going to be promoting that to everybody on the Bold Profits list.
Make sure you’re on our list. If you’re already a subscriber to Profits Unlimited, you will get an email inviting you to it. We recently put a cannabis stock in Profits Unlimited. It has gone down. I’ve gotten a lot of emails from people worried about it. I was saying this on Twitter: Bottoms never feel good. The bottom is difficult. It could be a rounded bottom where market makers swing that price around a lot.
Editor, Profits Unlimited
P.S. Small Business Saturday (November 30) highlights a growing trend among millennials and Gen Z to shop local, further supporting small business strength.
Are you going to support your local small business next Saturday? #shopsmall. Tell us what you plan to buy! Email us at firstname.lastname@example.org and be sure to follow me on Twitter @MampillyGuru for real-time market updates.