This government-backed megatrend is creating big stock market winners

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Today’s issue in preview:

• Here’s why the bull market is much healthier than the headlines suggest

• The stock market is flashing a bullish signal few investors are watching

• This government-backed megatrend is creating big stock market winners

• Learn our Top Themes to buy now

Here’s why the bull market is much healthier than the headlines suggest

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Since Nvidia CEO Jensen Huang’s extramarital activities became public knowledge on Oct. 29, the company has lost more than $1 trillion in market value.

Nvidia is a large component of the tech-heavy Nasdaq 100, which means the stock’s big decline has helped push the index well off its 2026 highs. It declined 14.8% from its October high to its recent November low.

That’s the bad news.

The good news is, the Invesco S&P 500 Equal Weight ETF (RSP) has barely budged over the past week… and is within 1% of its all-time high.

This is a great thing for your retirement account.

Here’s why…

The popular S&P 500 Index is a “market-cap weighted” index. This means the biggest companies, such as Nvidia (NVDA) and Apple (AAPL), have a greater impact on the index’s value than smaller companies. A big rally in a $5.1 trillion giant like Apple can overwhelm losses in 50 smaller companies.

An “equal weight” index nullifies market-value-related impacts – assigning equal weight to each stock in the index regardless of company size. With an equal-weight index, a massive 100% annual gain in a giant like Nvidia cannot mask or overwhelm weakness in hundreds of smaller stocks.

An equal-weight index does a much better job of showing how stocks are performing on average than a market-cap-weighted index, which is heavily influenced by the performance of the 10 largest companies.

RSP is by far the largest ETF that tracks the S&P 500 Equal Weight Index. It gives investors exposure to hundreds of varied industrial, banking, retail, transportation, technology, mining, healthcare, and energy stocks… big and small.

This fund’s construction ensures it can rise only when broad swaths of the economy are doing well.

Although Nvidia and other key AI infrastructure stocks have suffered steep declines over the past six weeks, enough “not AI” industries have performed well that RSP has climbed to within pennies of its all-time high.

RSP’s strength is an encouraging sign for the stock bull market. While many high-profile AI stocks have suffered deep declines, hundreds of stocks across a wide variety of industries are holding up well and running to new highs. This suggests the fundamental forces underpinning the current bull market are quite strong… and quite varied.

The stock market is flashing a bullish signal few investors are watching

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If you’re looking for a reason to feel optimistic on the U.S. economy today, look no further…

The U.S. hotel industry is booming.

This week, the stock prices of a wide variety of large hotel and resort operators reached new all-time highs. The list includes:

Host Hotels & Resorts (HST): The largest publicly traded U.S. hotel real estate investment trust (REIT) owns luxury and upper-upscale properties, primarily operated under Marriott, Ritz-Carlton, Hyatt, and other premium brands in major travel markets.

Ryman Hospitality Properties (RHP): Specializes in large convention-oriented resorts, including Gaylord Hotels properties. Its business emphasizes group meetings, conventions, corporate events, and entertainment-related assets, including its Opry entertainment holdings.

DiamondRock Hospitality (DRH): Owns premium hotels and resorts in major urban and vacation destinations. Its portfolio emphasizes upscale properties benefiting from corporate travel, group bookings, and leisure tourism.

Pebblebrook Hotel Trust (PEB): Focuses on upscale, lifestyle, and luxury hotels in major U.S. cities and resort destinations. Its properties emphasize distinctive guest experiences, premium accommodations, and desirable locations.

Xenia Hotels & Resorts (XHR): Invests in luxury and upper-upscale hotels and resorts across major U.S. markets. Its portfolio includes properties affiliated with Marriott, Hyatt, and other premium hospitality brands.

Chatham Lodging Trust (CLDT): Specializes in upscale, extended-stay and select-service hotels, including Residence Inn, Homewood Suites, and Courtyard properties. Its portfolio targets business travelers and guests seeking longer accommodations.

These hotel and resort operators – all structured as REITs – are not household names. But they occupy a unique place in America that allows their business results and stock price trends to send us important signals about the state of the U.S. economy.

These are the companies you spend money with when you go on vacation, when you take a trip to the city to visit family, and when you attend a conference for work. And those kinds of trips often coincide with money spent on restaurants, on shows, and on shopping.

All this means that hotel and resort operators, like the companies above, are highly economically sensitive.

They thrive when consumers have enough money to travel and when businesses are spending freely on conferences, deal-making, and events. They struggle when the opposite is the case.

Right now, these firms are not struggling. They are booming. And they don’t boom when the economy is weak.

Over the past month, I have highlighted the strong business performance and rising stock prices of credit card giant Visa (V), fellow giant Mastercard (MA), premium home furnishing retailer Williams-Sonoma (WSM), railroad firms, and electronics giant Best Buy (BBY).

We believe the strong business performance and rising stock prices of these firms, plus the hotel/resort REITs above, tell a powerful and important story…

Sure, the U.S. economy has risks, imbalances, and problems. It always does. But it also has some enormous positives working in favor of economic growth, business growth, and rising asset prices.

Right now, those enormous positives are overwhelming the negatives.

The trends of consumer spending and overall American economic health are unmistakably UP.

This government-backed megatrend is creating big stock market winners

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It’s not getting much press, but the Made in America megatrend is still rewarding shareholders at rapid rates.

The latest piece of evidence here is the new all-time high posted by industrial supply giant Fastenal (FAST).

Not many investors are familiar with Fastenal, but they should be.

With a market value of $64 billion, Fastenal is one of America’s largest distributors of the products that keep factories, construction sites, and industrial facilities running.

The company sells everything from nuts, bolts, screws, and fasteners to power tools, cutting tools, and maintenance supplies. It’s also a major seller of safety equipment for workers. Fastenal serves hundreds of thousands of customers, including manufacturers, construction companies, and government agencies. It is a giant in its field.

Being in this line of business means Fastenal is leveraged to big trends in U.S. manufacturing investment. Fastenal’s latest quarterly results show a very healthy business. Revenue jumped 15.5% year over year to $2.46 billion, while net income surged nearly 20% to $402 million. Fastenal reported a 20.2% increase in sales to heavy manufacturers and 12% growth in nonresidential construction sales.

Like Johnson Controls (JCI) and Emerson Electric (EMR), FAST is well positioned to benefit from a multi-year boom in U.S. manufacturing capacity expansion… which we call the Made in America megatrend.

Back in January, I made the case for investing in companies that supply critical equipment and services for building and operating today’s high-tech factories.

The bull case here is simple…

President Donald Trump – along with many business and military leaders – believes that the U.S. has outsourced far too much of its industrial capacity to China over the past 25 years. We outsourced significant portions of our semiconductor, appliance, medicine, weapons, and machinery production.

We outsourced the capacity to produce and process critical resources, such as rare earth elements.

The COVID –19 pandemic showed that depending on other countries for critical economic inputs makes the U.S. economy less safe and secure. To put it bluntly, it is very stupid not to produce products critical to national security, like AI semiconductors, within our own borders… especially when we are in an economic and geopolitical “great powers” contest with China.

Trump has staked his legacy and reputation on greatly expanding our industrial base… and he’s working with business leaders to invest trillions to pursue this goal.

Collectively, major American companies such as Apple (AAPL), Nvidia (NVDA), Micron (MU), IBM (IBM), and Eli Lilly (LLY) have announced more than $1.5 trillion in planned U.S. investments spanning advanced manufacturing, new factories, research facilities, and domestic supply chains.

In Money & Megatrends, we’ve capitalized on this “Made in America” megatrend with strong returns in robotics, factory automation, and machine component makers such as Cognex (CGNX), Ouster (OUST), and RBC Bearings (RBC).

The Made in America megatrend involves building huge amounts of new AI data centers, high-tech factories, and electrical infrastructure. All the infrastructure requires enormous amounts of nuts, bolts, screws, rivets, pins, rods, and clamps. The workers building and operating the infrastructure require enormous amounts of gloves, safety glasses, helmets, harnesses, face shields, and hearing protection.

Fastenal’s strong business performance and market leading share price strength show us the Made in America megatrend is in full swing… and a rewarding place for shareholders.

Market Notes

• Tech supergiant Apple (AAPL) continues to look like an AI Applications Layer winner. The stock reached an all-time high today.

• The American consumer continues to spend money with enthusiasm. Mega retailer Costco (COST) reached an all-time high today.

• GLP-1 drug leader Eli Lilly (LLY) reached an all-time high today.

• The Healthcare Diagnostics bull market continues to produce winners. Diagnostics giant Quest Diagnostics (DGX) reached a new all-time high today.

• The Cardiovascular Health theme continues to run higher. Heart device giant Edwards Lifesciences (EW) reached a new one-year high today.

Regards,

Brian Hunt
Editor, Money & Megatrends

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