4 Key Macro Factors to Watch on Our Road to Recovery

I'm also seeing bright spots in retail sales. Nominal retail sales in the third quarter are on track to surge at a 61% sequential annualized rate, with real consumer spending up 37%. We have more than recouped retail sales from the March/April lows, and are on track to be above even the January pre-COVID crisis lows.

3. Copper as Economic Indicator

Copper, a "tell" on upcoming global growth, has showed notable strength in recent months, hitting a 36-month high recently, due in part to rebounding industrial demand in both the U.S. and China.

While we could see a potential pullback in copper prices over the next few weeks and months, the steady price increase since late March indicates that economic and manufacturing activity is picking up globally. And, it's a sign that inflation expectations could be creeping up.

As an economic indicator for equities investors over the next 6-10 months, copper's strength tells us two things: 1) We can expect to see growth and steadily improving profits into next year, and 2) the market isn't as expensive as what people are saying, and there's room to the upside.

4. Uneven Recovery Is an Opportunity

The recovery continues to be uneven, but understanding the fundamentals can point you to opportunities.

The entertainment and leisure industries — restaurants, hotels, gaming and other businesses — are still struggling to keep their heads above water as COVID shutdowns continue. At the same time, homebuilders are showing impressive strength, reporting strong demand for new builds across the country. Additionally, home improvement retailers are staying strong.

For advisors looking to optimize their portfolios, my view is that now is not the time for 60/40 allocations. With rates so low, bonds are clearly not the place for growth, but we will see the recovery reflected in certain equity market sectors.

The U.S. has the most aggressive fiscal and monetary policy in the world, so you'll want exposure to U.S. equities, with diversification. I recommend sticking with a barbell approach, with a balance of secular growth such as tech, along with economically sensitive cyclical stocks such as industrials, mining and materials.

The total addressable market (TAM) in tech companies is noteworthy: The Internet of Things is set to be a trillion-dollar market in 10 years, SaaS cloud will be a trillion-dollar TAM by the end of the decade, wearables will be $55 billion within two years, and retail e-commerce – which was $3.5 trillion last year – is going to $6.5 trillion by 2023. I continue to focus on these and other secular trends in technology, such as the growth of 5G and data centers.

While the possibility of a second fiscal package is currently tied up in political posturing, the lackluster performance we're seeing in the travel, leisure, entertainment and other industries makes me think the stimulus will come.

These are industries that struggle even in a bullish market, and as the pandemic has effectively neutered their business models for the foreseeable future, there are a lot of small- and medium-sized businesses that will not survive without a second stimulus. They need help, and I do think they will get it at some point, but the longer it takes to put together, the bigger the risk that our recovery will plateau.

Stephanie Link joined Hightower in June as chief investment strategist and portfolio manager. She leads Hightower's Investment Solutions group, which provides outsourced chief investment officer (OCIO) services, model portfolios, separately management accounts (SMAs), investment research and due diligence for Hightower advisors. Prior to joining Hightower, Link was the senior managing director and head of global equities research at Nuveen. Follow Stephanie Link on Twitter: @Stephanie_Link