When it comes to U.S. economics and politics, a lot has happened over the past 24 hours. And the sum of these developments strongly suggest that small-cap stocks are about to surge in a big way. 

Of course, last night, the first U.S. presidential debate took place. It was the first time since 2020 that current President Joe Biden and former President Donald Trump faced off in a debate. 

The Biden campaign – who reportedly pushed hard for this event – was hoping that a strong showing would calm voters’ hesitancy and reenergize his reelection campaign. 

But the opposite happened. And the betting markets interpreted the debate as a huge “win” for Trump and a huge “loss” for Biden… 

Bets on the Presidency

Before last night, PredictIt was pretty much at 50/50 odds between Trump or Biden winning the 2024 presidential election. As of this morning, Trump’s odds have risen to 60%, while Biden’s odds have fallen all the way to 30%.

For the very first time, the betting markets are decisively saying that Trump should win the White House in November. 

That’s a major development. 

PCE Inflation Came in Soft

Meanwhile, May’s Personal Consumption Expenditures (PCE) index – the Federal Reserve’s preferred inflation report – was released this morning. It showed that PCE inflation fell from 2.7% to 2.6% in May, while the core PCE rate (the one the Fed watches most closely) dropped even more from 2.8% to 2.6%. 

Core PCE inflation is now running at its lowest level since March 2021 – and it’s expected to fall further in June.

This weak data strongly suggests that the Fed will likely cut interest rates several times toward the end of this year.

And as visibility toward those coming rate cuts improves, stocks should start to take off.

The Final Word

So… over the past 24 hours… Trump’s odds of winning the White House have skyrocketed… while odds of multiple incoming rate cuts have risen strongly, too. 

That means it’s time to go “all-in” on small caps. 

In fact, do you know what type of stocks tend to soar after the Fed cuts interest rates? 

Or how about which stocks soared during the first two years of Donald Trump’s first term? 

Small-cap stocks. Indeed, the small-cap Russell 2000 surged about 50% from late 2016 to late 2018, after going essentially nowhere for three straight years.

Signs are emerging that indicate a huge small-cap stock rally is coming, and it could last throughout 2024, ‘25 and ‘26. 

If things pan out as they’re shaping up to… and inflation keeps falling, the Fed cuts interest rates in September and Trump wins the election in November… 

And the betting markets suggest they will…

Then small-cap stocks are on the launching pad right now. 

It is time to buy those future mega-winners. 

But to maximize your returns, it’s essential to buy the best small-cap stocks of the bunch. 

Check out a few of our favorites to buy right now.

_{On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.}

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