US consumer prices increased 0.3% for the month to bump the annual rate of inflation to 2.7% in November, as per data the Bureau of Labour Statistics reported on Wednesday.

Higher inflation tends to weigh on consumer spending which can negatively affect retail sales.

Still, Goldman Sachs analyst Kate McShane sees two retail stocks: Ollie’s Bargain Outlet Holdings Inc (NASDAQ: OLLI) and Target Corp (NYSE: TGT) as worth buying for 2025.

Let’s take a closer at what each of these has in store for investors.

Ollie’s Bargain

Kate McShane dubbed Ollie’s stock a top small/midcap idea for 2025.

Shares of the discount retailer are already up more than 60% this year but she remains bullish as Ollie’s is relatively less exposed to the impact of expected tariffs under the Trump administration.

Plus, the Nasdaq-listed firm stands to benefit if inflation remains somewhat of a problem and makes consumers prefer discounters over other retailers.  

Ollie’s Bargain continues to expand its store footprint and improve operational efficiency which helped it top Street estimates for adjusted per-share earnings in its latest reported quarter.

“Our value proposition is clear, our deal flow is strong, and our ability to execute is as good as it’s ever been,” the company told investors in a press release this week.

Goldman Sachs also has confidence in the leadership of Eric van der Valk who’s scheduled to take the helm from John Swygert at the beginning of fiscal 2025.

Ollie’s shares do not, however, pay a dividend at writing.

Target Corp

Target stock is currently trading more than 20% below its year-to-date high Kate McShane dubs an opportunity to load up on a quality name at a deep discount.

McShane recommends the big box retailer for long-term investors as it’s more exposed to discretionary goods – a category she’s convinced will see strong growth over the next 12 months as the US Federal Reserve continues to lower interest rates.

Target is committed to strengthening its footprint in e-commerce and private label brands to create new revenue streams.

Goldman Sachs expects such efforts to help improve the retailer’s margins and unlock significant upside in its share price next year.

Note that the diversification strategy paid off well at Walmart.

TGT is attractive to own also because it’s been cutting prices on thousands of frequently purchased items to woo price-sensitive consumers this year.

Target shares have an edge over Ollie’s Bargain as they pay a healthy dividend yield of 3.29% at writing which makes them all the more enticing for those interested in generating passive income over the long term.

The Street-high price target of $170 on Target stock translates to a more than 25% upside from here.

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The stock market’s recent retreat has left traders on edge, even as the S&P 500 remains close to its record highs.

Despite a two-day pullback of just 0.9%, Wall Street’s fear gauge, the CBOE VIX index, has risen by 11%, signalling that some market participants are wary of a deeper correction.

Momentum stocks, which had driven the market’s rally in recent months, showed signs of faltering this week.

The reversal in popular plays on Monday, followed by a decline in the S&P 500 on Tuesday, has raised concerns that market strength may be running out of steam.

However, the broader picture remains relatively optimistic. The S&P 500 is still up 26.5% year-to-date and sits just under 1% from its record high.

For many investors, the rally can be attributed to the so-called “Trump trade” — a bet on stocks expected to benefit from President-elect Donald Trump’s policies.

This trend has supported key sectors like technology and defence, especially as the election result signalled a continuation of pro-business policies.

Cathie Wood’s ARK funds rally on Trump’s re-election

Cathie Wood, known for her ARK Innovation ETF (ARKK), has seen a resurgence since Trump’s re-election.

The ARKK, which famously invested in high-growth tech stocks like Tesla, Roku, and Twilio, dropped dramatically in mid-2021 but has regained momentum, jumping 27.6% since Trump’s victory.

Tesla’s resurgence has been a major driver of ARKK’s performance, considering it comprises 10% of the fund.

However, another ARK fund, the Next Generation Internet ETF (ARKW), has outperformed ARKK.

With a 29.5% increase since the election, ARKW has more significant exposure to sectors benefiting from Trump’s policies, such as crypto and defence.

The fund’s 11.5% weighting in the ARK 21Shares Bitcoin ETF has added substantial value following the recent rally in Bitcoin prices, signalling the growing interest in cryptocurrency under a pro-business, crypto-friendly administration.

ARKW: A stronger proxy for Trump 2.0

While ARKK has captured most of the attention, analysts like Todd Sohn, ETF and technical strategist at Strategas Securities, argue that ARKW is a stronger bet for those looking to capitalize on Trump’s second term.

With its 10% Tesla weighting, alongside stakes in Palantir Technologies and Bitcoin, ARKW stands out as a more direct proxy for the so-called “Trump 2.0” trade.

Palantir’s rise, driven partly by hopes for increased government defence contracts, further strengthens ARKW’s appeal.

The fund also includes exposure to cryptocurrency-related stocks like Coinbase and Robinhood, which are seen as benefiting from Trump’s crypto-supportive stance.

The outlook for ARK ETFs and the broader market

Despite the recent rally, some ARK funds, especially ARKK, have seen outflows.

There are over 2,600 equity ETFs on the market, and Sohn points out that strong past performance doesn’t guarantee continued success.

However, for those bullish on Trump’s policies and their market impact, ARKW remains a compelling option, given its exposure to key growth sectors like crypto, Tesla, and defence.

For now, despite the brief market retreat, the underlying bullish trend fueled by the Trump trade and favorable policies continues to propel certain ETFs to new highs.

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As Indian equity markets grapple with stiff valuations, investors are increasingly exploring international opportunities, particularly in the United States.

Wall Street’s recent strong performance, led by technology stocks, has made US equity mutual funds a viable diversification strategy.

According to a report by The Economic Times, financial planners are recommending investors to allocate 5-10% of their equity portfolios to US markets, staggering investments over the next year to mitigate risks from the sharp run-up in valuations.

Indian vs US equities: a valuation snapshot

At present, the S&P 500 trades at a price-to-earnings (PE) ratio of 25.41, slightly lower than the Nifty 500’s 26.5.

Vishal Dhawan, founder of Plan Ahead Wealth Advisors, notes in the report,

At the broad index level, valuations of Indian and US equities are similar. Several US companies are expected to show strong growth.

Dhawan advocates systematic investment plans (SIPs) in funds like Franklin US Opportunities Fund for those with a higher risk tolerance.

Some diversified and sectoral equity mutual fund schemes have a provision to allocate up to 35% to overseas equities.

Schemes like PPFAS Flexicap Fund have a mandate to invest in global companies.

Indian and US markets together exposes an investor to 30% of global GDP

The US accounts for approximately 25% of global GDP and hosts unique businesses in emerging sectors, making it an attractive destination for Indian investors.

A note from Motilal Oswal Mutual Fund highlights that combining investments in the US and Indian markets provides exposure to 30% of global GDP.

Additionally, the low correlation between US and Indian markets helps reduce portfolio volatility, enhancing risk-adjusted returns.

Over the past year, the S&P 500 surged 37%, outpacing the Nifty 500’s 25.29% gain.

“The US markets are up sharply, led by technology stocks in the last one year, but the move ahead is not going to be one-sided,” said Vineet Nanda, founder, SIFT capital.

Nanda believes investors could stagger investments and use a buy on dips approach.

However, wealth managers caution against over-allocating to the US.

Feroze Azeez, deputy CEO of Anand Rathi Wealth, warns, “The US market faces geopolitical risks, inflationary pressures, and Federal Reserve policy uncertainties.”

Investors should maintain a strong domestic equity position while considering small allocations to US equities.

Regulations limit options for US equity investments

Despite the appeal, Indian investors face limited options for US equity investments, distributors say.

This is because the Reserve Bank of India (RBI) enforces a cap of $7 billion for mutual funds and an additional $1 billion for exchange-traded funds (ETFs).

This restriction limits the availability of funds focusing on mid- and small-cap US stocks or sectors outside technology.

Many fund houses have halted new investments due to these limits.

For those keen on US exposure, options include large-cap-focused funds or Nasdaq 100 ETFs, which are heavily weighted towards technology.

Furthermore, international funds enjoy favourable tax treatment, with a long-term capital gains tax of 12.5% after a two-year holding period.

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WhiteBIT, a leading European cryptocurrency exchange, has launched the WhiteBIT Nova card in partnership with Visa and Wallester AS.

This innovative debit card enables EU residents to seamlessly spend their digital assets on everyday transactions while earning up to 10% cashback.

Designed to integrate cryptocurrencies into daily life, the card bridges the gap between blockchain technology and traditional financial systems.

It offers multiple user benefits, including support for major cryptocurrencies, no service fees, and flexible cashback options.

Key features of the WhiteBIT Nova card

The WhiteBIT Nova card offers EU users a unique financial tool with several standout features:

• Zero service fees: The card comes with no fees for opening, maintaining, or closing accounts, making it highly accessible. Users can activate it without any initial deposit or upfront costs.
• Physical and digital options: Cardholders can choose between digital and physical cards. Physical cards allow higher spending limits and ATM withdrawals and can be delivered within 10 business days for €10.
• Multi-crypto support: The card supports a wide range of cryptocurrencies, including BTC, ETH, XRP, SOL, ADA, and more. This flexibility lets users spend their preferred digital assets on everyday needs.
• Customizable cashback rewards: Cardholders can earn cashback in BTC or WhiteBIT Coin (WBT) across categories like groceries (1%), dining (3%), and subscriptions (10%). Users can select up to three categories and adjust them daily to maximize benefits.
• Referral bonuses: The card also includes a referral program, rewarding users with 1 USDC for each friend who activates a card through their link, up to 50 USDC.

Secure and versatile functionality

The WhiteBIT Nova card integrates with Apple Pay, enabling secure contactless payments. With spending limits of up to €10,000 daily and €25,000 monthly, the card caters to a broad spectrum of users.

WhiteBIT CEO Volodymyr Nosov highlighted the card’s mission to enhance crypto adoption:

The WhiteBIT Nova card is a significant step in making cryptocurrency a practical option for everyday transactions. It reflects our commitment to fostering blockchain technology’s mass adoption and creating an inclusive financial future.

The card is issued by Wallester AS, a licensed payment institution authorized by the Estonian Financial Supervision and Resolution Authority.

Simplified application and usage

EU residents can easily apply for the WhiteBIT Nova card through the WhiteBIT platform. Once verified, users can start spending immediately with a virtual card or order a physical card for extended functionality.

The card is tailored for simplicity and convenience, supporting diverse spending needs, from groceries to subscriptions.

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The European Central Bank (ECB) is expected to announce a 25-basis-point interest rate cut on Thursday at its final meeting of 2024, a move that would lower the deposit facility rate to 3%.

This would mark the fourth consecutive quarter-point reduction this year, as the ECB navigates a challenging economic landscape marked by subdued growth and persistent inflationary pressures.

A key issue for the ECB’s Governing Council is determining how far rates should be cut to reach “neutral” territory — where monetary policy neither stimulates nor restricts economic growth.

In a chat with Bloomberg last month, Isabel Schnabel, an influential ECB policymaker estimated the neutral rate at 2-3% and warned against dropping rates too far below that range.

However, more dovish voices, such as French central bank Governor Francois Villeroy de Galhau, argue that rates may need to dip into accommodative territory — below neutral — if growth remains weak and inflation falls below the ECB’s 2% target.

“This is the ECB, so they always move very slowly,” said Fabio Balboni, senior European economist at HSBC, predicting a lively debate among policymakers before settling on a modest 25-basis-point cut.

Economic struggles weigh on policy direction

The eurozone’s economic challenges are front and center in Thursday’s discussions.

Weak German retail sales and sluggish manufacturing data across major economies have underscored the region’s struggle to regain momentum.

Despite this, a 50-basis-point cut appears unlikely even as headline inflation nears the ECB’s 2% target, as underlying pressures, such as wage growth and persistent service-sector inflation, remain a concern.

Also, the ECB’s conservative approach contrasts with the Federal Reserve and the Bank of England, which have surprised markets with unexpected policy moves.

Analysts widely expect the ECB to maintain its predictable path, cutting rates gradually over the coming quarters.

Bank of America Global Research forecasts 25-basis-point reductions at each ECB meeting through September 2025, potentially bringing the deposit facility rate to 1.5%.

“The eurozone economy will grow at or below trend for most of 2025, necessitating further easing,” the bank noted.

Projections and messaging in focus

Two key updates will shape market reactions to the ECB’s decision: new macroeconomic projections for growth and inflation, and potential shifts in the bank’s messaging.

The ECB has consistently stated it will “keep policy rates sufficiently restrictive for as long as necessary.”

A dovish pivot in this language would signal a faster pace of rate cuts, particularly given global uncertainties such as trade tensions with the US.

A more accommodative stance could be essential to address the eurozone’s weak growth prospects.

“We think there could be some downward revision to growth and perhaps even inflation forecasts today,” Chris Turner, global head of markets at ING, said in a note today.

“Dropping the 2025 forecast closer to 2.0% could potentially lay the path for an accelerated easing cycle,” he added.

Gradual easing for long-term growth

Goldman Sachs’ Chief European Economist, Jari Stehn, expects Thursday’s decision to reaffirm the ECB’s gradual easing strategy.

“Lower rates will help somewhat with savings and boosting consumer spending, which is why we believe Europe will grow next year,” Stehn said.

Despite the cautious pace, the ECB’s ongoing rate cuts are seen as a critical step toward stabilizing the eurozone economy.

By signalling its willingness to adjust policy, the central bank aims to strike a delicate balance between managing inflation and fostering conditions for long-term growth.

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