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- Jim Paulsen, Leuthold chief investment strategist, told CNBC on Thursday he sees "really strong momentum" coming into the fourth quarter of 2020.
- The four kinds of stocks that he said will gain in the next few months are cyclicals, small-caps, international stocks, and financials.
- He also said he believes the stimulus bill was "massive" and its positive effects are only beginning to play out in markets.
Leuthold's Jim Paulsen told CNBC on Thursday that there's "really strong momentum" coming into the fourth quarter and stocks that benefit from this broader economic improvement will begin to take leadership.
"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. We're going to slow dramatically from that here in the fourth quarter. But I think we're still going to grow maybe 5-10% in the fourth."
He added that the "massive" and "unprecedented" stimulus bill will take roughly a year to start working, and the market may see some positive effects of it beginning in the fourth quarter. News of a successful vaccine in the fourth quarter or beginning of next year will help boost recovery stocks.
"We're not going to shut this recovery down," Paulsen added.
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 begins to raise bond yields as the economy recovers.
"If I'm right on the macro story and growth continues to improve, then I think the Federal Reserve and other policy officials around the globe are going to have to back away from keeping bond yields low," he said, "and that would really improve financial stocks."
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