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Buying a knockoff used to be a consumer’s dirty little secret, largely because a “fake” was considered inferior to the real thing.
These days, brand imitators, also known as dupes, have elbowed their way into the mainstream.
In many cases, buying a dupe is just more “financially responsible” at a time when many consumers feel cash-strapped, one expert said.

Klaus Vedfelt | Digitalvision | Getty Images

From leggings to lip gloss, there’s a dupe for almost any brand-name product.
Buying a knockoff used to be a consumer’s dirty little secret, largely because a “fake” was considered inferior to the real thing, not to mention the economic cost and intellectual property rights infringement.

But brand imitators, also known as dupes — short for duplicates — have elbowed their way into the mainstream and are now even cool.
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“It’s not necessarily because the consumer doesn’t love the brand, sometimes it just makes more financial sense to buy the dupes,” said Sara Walker, a Los Angeles-based influencer and fashion industry expert.
Unlike illegal counterfeit goods, which tend to carry an unauthorized trademark or logo of a patented brand, these dupes are cheaper, typically legal alternatives to premium or luxury consumer products, and in some cases preferred to their pricier counterpart.
“It’s not a direct knockoff, it’s kind of revising something that’s very chic from a designer world into a more accessible product,” Walker said.

Brand imitators have found “this narrow little aisle to operate in that satisfies consumer demand” and keeps them safe from actual legal action from the companies they are duping, according to Ellyn Briggs, brands analyst at Morning Consult.
Even when consumers can get the real thing, nearly 33% of adults intentionally purchased a dupe of a premium product at some point, according to a report by Morning Consult. The business intelligence company polled more than 2,000 adults in early October.

TikTok is ‘ground zero’ for dupes

“The online culture of dupe shopping, accelerated by TikTok … has flipped the script,” according to Briggs.
“TikTok is ground zero for where all this is happening,” she said.
TikTok Shop, especially, “has become the storefront for dupes,” Briggs said.
Younger generations use TikTok Shop, which launched as an e-commerce platform within the short-form video app in September of last year, more than older cohorts: About 40% of Gen Zers between the ages of 18 and 26 have made at least one purchase. Similarly, 37% of millennials have bought at least one item on TikTok Shop, according to a Morning Consult poll conducted in December.
But designer look-alikes can also be found at retail giants such as Amazon and Walmart, as well as Costco, home to the viral floor mirror dupe of an Anthropologie mirror.
“Dupes are everywhere now. That’s just how it is,” Walker said.

Dupes are a sign of the times

Often, shopping for dupes is a way to participate in a trend without breaking the bank — especially at a time when styles cycle through faster and faster, according to Walker, who said she has tried dupe leggings, dupe perfume and dupe sunglasses.
“It’s not always financially responsible to buy the original,” Walker said.
Briggs said that in some ways, dupe shopping is a form of bargain hunting, which has been “repackaged” into a new subset of online shopping — just as other viral trends on TikTok are repackaging longstanding or pre-existing behaviors.
The quality may vary, however. In other words, you get what you pay for.

“Trends come and go and if you are constantly updating your wardrobe based on the trends, that can get expensive,” Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida, told CNBC earlier this year, speaking about the “mob wife” fashion trend.
McClanahan is a member of CNBC’s Financial Advisor Council.
These days, more Americans are struggling in the face of sky-high prices for everyday items, and most have exhausted their savings and are now leaning on credit cards to make ends meet, recent reports show.
As consumers continue to stretch to cover rising rent, increased food prices and higher borrowing costs, there is less disposable income left for discretionary spending, according to Brett House, economics professor at Columbia Business School. That has helped open the door to dupes.

“Sustaining recent consumption patterns is making people potentially susceptible to the promise that a dupe offers,” House said.
The “sustained interest” for dupes also reflects how increasingly cautious consumers are about making big purchases in this economy, said Briggs.
In the end, price is “the No. 1 factor for purchase decisions,” she added, whether a shopper is cash-strapped or not.

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Nearly 60% of Americans aren’t comfortable with their emergency savings, up from 48% in 2021, according to a Bankrate survey.
Regardless of the economic climate, investors need emergency savings to cover expenses in the event of a job loss or other unexpected bills, experts say.
However, savings benchmarks can depend on your family’s circumstances.

Pascal Broze | Onoky | Getty Images

As investors face economic uncertainty, financial advisors have guidelines for how much cash they should have set aside.
Despite second-quarter economic growth, nearly 60% of Americans wrongly think the U.S. is currently in a recession, according to a June survey of 2,000 adults from Affirm.

While Goldman Sachs and JP Morgan raised recession forecasts in August, other experts still expect an economic “soft landing,” meaning the Federal Reserve’s policy won’t cause a downturn.
Meanwhile, inflation continues to ease, but a weaker-than-expected jobs report for July triggered stock market volatility last week.
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Amid the uncertainty, nearly 60% of Americans aren’t comfortable with their level of emergency savings, up from 48% in 2021, according to an annual Bankrate survey that polled more than 1,000 U.S. adults in May.
As of the polling, some 27% of those surveyed had no emergency savings — the highest percentage since 2020, Bankrate found.

Regardless of the economic climate, investors need emergency savings to cover expenses in the event of a job loss or other unexpected bills. Here’s how much cash to set aside, according to financial advisors.

Dual earners: Three months is a rule of thumb

Double-income families should aim to save at least three months of living expenses, according to certified financial planner Greg Giardino, vice president of Wealth Enhancement Group in Oakland, New Jersey. 
However, you could adjust that guideline “depending on the reliability of those income sources,” he said. For example, commissioned workers with unpredictable cash flow may need more than tenured professors.
Building that level of cash reserves isn’t easy. Only 44% of Americans have three months of expenses saved for emergencies, according to Bankrate’s survey.

Single income: Save six months or more

Generally, single individuals or families with a single income should save at least six months of expenses, experts say.
But higher levels of cash reserves could offer more flexibility when faced with a job loss or economic downturn.
Douglas Boneparth, a CFP and president of Bone Fide Wealth in New York, prefers six to nine months of savings for single earners.
“I’ve never come across someone who was upset that they had a little bit more cash than they needed,” said Boneparth, who is also a member of CNBC’s Financial Advisor Council.

Boston-based CFP and enrolled agent Catherine Valega, founder of Green Bee Advisory, said she is “more conservative than most other advisors” and recommends 12 to 18 months of living expenses in “safe, liquid investments” for single earners.
Although the Federal Reserve could start cutting interest rates in September, investors still have “high-yield savings opportunities,” she added.

Entrepreneurs: Keep up to one year of expenses

With unsteady income, entrepreneurs or small business owners could also benefit from higher levels of savings — eight to 12 months of expenses, according to Giardino of Wealth Enhancement Group.
Of course, the exact amount for emergency savings depends on your unique circumstances and your family’s needs.

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The consumer price index rose 2.9% in July 2024 from a year earlier, according to the U.S. Bureau of Labor Statistics.
That was the lowest reading since March 2021.
Inflation for consumer staples has eased considerably, economists said.

d3sign | Moment | Getty Images

Inflation continued to retreat in July, aided by easing price pressures for consumer staples like food and energy and physical goods like new and used cars.
The consumer price index, a key inflation gauge, rose 2.9% in July from a year ago, the U.S. Department of Labor reported Wednesday. That figure is down from 3% in June and the lowest reading since March 2021.

The CPI gauges how fast prices are changing across the U.S. economy. It measures everything from fruits and vegetables to haircuts, concert tickets and household appliances.

“I think it’s right down the strike zone,” Mark Zandi, chief economist of Moody’s, said of the CPI report.
Perhaps the most important thing for consumers is inflation for groceries “continues to grow very slowly,” Zandi said.
Combined with similar good news for other necessities like gasoline and market rents for new tenants, “that’s really encouraging news, particularly for the lower-income consumers that are the most hard pressed,” he added.

Inflation guides Fed interest rate policy

The July inflation reading is down significantly from the 9.1% pandemic-era peak in mid-2022, which was the highest level since 1981.

It’s also nearing policymakers’ long-term target, around 2%.
“We think we’re though the worst of it from an inflation perspective,” said Joe Seydl, senior markets economist at J.P. Morgan Private Bank.

The U.S. Federal Reserve uses inflation data to help guide its interest rate policy. It raised rates to their highest level in 23 years during the Covid-19 pandemic era, pushing up borrowing costs for consumers and businesses in a bid to tame inflation.
Recent labor market data has spooked some investors, who fear it signals a U.S. recession may be near. Many economists say those concerns are overblown, at least for now.

Nonetheless, easing inflation coupled with a cooler labor market make it likely that Fed officials will start cutting interest rates at their next policy meeting in September, economists said. Doing so would reduce borrowing costs, helping buoy the economy.
“In short, this CPI report represents more good data and adds to the evidence supporting a [0.25 percentage point] September rate cut,” Paul Ashworth, chief North America economist at Capital Economics, wrote in a note Wednesday.

Housing is a stumbling block

Housing is the one major impediment keeping inflation elevated above the Fed’s target right now — on paper, at least, economists said.
Shelter is largest component of the CPI, and therefore has an outsized effect on inflation readings.
The shelter index has risen 5.1% since July 2023, accounting for more than 70% of the annual increase in the “core” CPI, the BLS said Wednesday. (The core CPI is economists’ preferred gauge of inflation trends. It strips out food and energy costs, which can be volatile.)

After declining to 0.2% in June on a monthly basis, shelter inflation jumped back to 0.4% in July, the BLS reported.
Housing inflation moves up and down at glacial speed due to how the government measures it, economists said. Such data quirks mask positive news in the real-time rental market, which has seen inflation flatline for about two years, Zandi said.
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Excluding shelter — which is likely warranted given measurement issues — “we’re at the Fed’s target and then some,” Zandi said.
“Mission accomplished, in my view,” he said of the fight against inflation.
After stripping out shelter, the CPI rose 1.7% in July, below the Fed’s annual target.
Economists broadly expect shelter CPI inflation to continue to throttle back slowly given prevailing trends for market rents.

Other ‘notable’ categories

Motor vehicle insurance, medical care, personal care and recreation are some other indexes with “notable” increases over the last year, according to the BLS.
Prices in those categories are up 18.6%, 3.2%, 3.4% and 1.4%, respectively.
A surge in new and used car prices a few years ago is likely now fueling high inflation for car insurance premiums and vehicle repair, since it generally costs more to insure and repair pricier cars, economists said.

Insurance inflation should ultimately fade alongside falling car prices, they said. New vehicle prices are down 1% over the past year, and those for used cars and trucks have declined almost 11%.
Egg prices — which had surged in 2022 due to a historic outbreak of bird flu — are rising again following a reemergence of the deadly disease. They’re up 19% from a year ago.
Other food categories including bacon and crackers are up over the past year (by 8.5% and 3%, respectively), but their prices fell during the month of July, suggesting more potential declines ahead.
Overall annual grocery inflation was 1.1% in July, down from an average 11.4% in 2022, which was the highest since 1979.

How supply and demand impacted inflation

Inflation for physical goods spiked as the U.S. economy reopened in 2021. The Covid-19 pandemic disrupted supply chains, while Americans spent more on their homes and less on services such as dining out and entertainment.
It is a different story now. Goods inflation has largely normalized, while the services sector is a fly in the ointment, economists said.
However, services inflation — generally more sensitive to labor costs — should ease further due to a slacker job market and declining wage growth, economists said.
High interest rates have also served to reduce overall inflation by reducing demand, Seydl said.

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With the fate of federal student loan forgiveness programs facing uncertainty, borrowers should explore the many state-level relief options available, experts say.
“Most states have [a program], especially if you’re in health care,” said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.

Halfpoint Images | Moment | Getty Images

With the federal government’s ability to forgive student debt up in the air, experts say it would behoove borrowers to explore the many state-level relief programs available.
“Most states have one, especially if you’re in health care,” said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit that helps borrowers navigate the repayment of their debt.

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A student loan forgiveness initiative for nonprofit and hospital nurses in Minnesota has gotten some attention of late, because Vice President Kamala Harris’ running mate, Tim Walz, signed it into law last year. Under that program, registered nurses who work at a nonprofit or public hospital in Minnesota are eligible for up to $12,000 in student debt relief.
Different states have programs focusing on various fields.
“There’s a bunch for teachers and public defenders, and some oddball ones,” Mayotte added. “And some of them are really generous.”

What’s happening with federal forgiveness programs

Currently, the federal government’s ability to forgive student debt is in jeopardy.

The Biden administration’s new repayment Saving on a Valuable Education plan, known as SAVE, that leads to expedited forgiveness for certain borrowers is on hold amid a barrage of Republican-led legal challenges. President Joe Biden’s broad-based forgiveness effort could be finalized this fall, but is likely to end up in court, too.

State forgiveness often based on occupation

Most state-level student debt forgiveness programs offer relief to borrowers in specific occupations, said higher education expert Mark Kantrowitz.
“So they should look for forgiveness based on their job, especially for their state,” Kantrowitz said.
For example, in California, licensed mental health professionals who work at certain facilities may be eligible for up to $15,000 in student loan assistance. (The next application deadline is Aug. 26.)
The Maine Dental Education Loan Repayment Program offers a total of $100,000 in student loan repayment assistance to dentists in underserved areas of the state.

One benefit of the state loan forgiveness programs, Mayotte pointed out, is that private student loans are often eligible. The federal government, meanwhile, excludes private loans from its relief.
Other state programs may offer forgiveness based on your finances rather than your occupation.
In New York, the Get On Your Feet Loan Forgiveness Program, rolled out in 2015, allows certain residents to get loan forgiveness for up to 24 months of their payments. Among other qualification requirements, borrowers must have an adjusted gross income of less than $50,000 a year.
The Institute of Student Loan Advisors has a database of student loan forgiveness programs by state.

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Former President Donald Trump and Vice President Kamala Harris both want to end taxes on tips — and some policy experts have already criticized the idea.
In 2023, there were roughly 4 million U.S. workers in tipped occupations, representing 2.5% of all employment, according to estimates from The Budget Lab at Yale University.
If enacted, the plan could face administrative hurdles and be costly, experts say.

U.S. Vice President Kamala Harris and Republican presidential nominee and former U.S. President Donald Trump.
Brendan Mcdermid | Elizabeth Frantz | Reuters

Former President Donald Trump and Vice President Kamala Harris both want to end taxes on tips — and some policy experts have already criticized the idea.
Harris expressed support for tax-free tips at a rally on Saturday in Las Vegas. Her comments come roughly two months after Trump shared a similar idea, also at a rally in the service economy hotbed.

Nevada is a key battleground state where the hospitality sector accounts for roughly one-quarter of the workforce, according to the state’s June employment data.
“It is my promise to everyone here, when I am president, we will continue to fight for working families, including to raise the minimum wage and eliminate taxes on tips for service and hospitality workers,” Harris said at her rally.
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In 2023, there were roughly 4 million U.S. workers in tipped occupations, representing 2.5% of all employment, according to estimates from The Budget Lab at Yale University.
Generally, tipped workers are lower-income individuals, and some 37% weren’t subject to federal income tax in 2022, the report found. As a rule, employed workers who make less than their standard deduction don’t owe federal income taxes.

Not taxing tips is “a fairly narrowly targeted tax exemption,” said Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation.
Still, the idea has some bipartisan support in Congress with a bill introduced in the Senate in July and a House companion bill.

No tax on tips ‘fails every score’

Despite support for no tax on tips from Harris and Trump, some experts have voiced concerns about future plans. 
Experts consider equity, efficiency and revenue when weighing policy, explained Steve Rosenthal, senior fellow at the Urban-Brookings Tax Policy Center. “The striking thing about this proposal is it fails every score that you might make for tax policy.”

If enacted, the idea could face administrative hurdles and possible abuse, experts say. For example, some workers could try to reclassify wages as tips to avoid the tax.
After Harris’ weekend comments, a campaign official told CNBC that, if elected, Harris would work with Congress to enact a law with an income limit and requirements to prevent “hedge fund managers and lawyers from structuring their compensation in ways to try to take advantage of the policy.”
Trump’s campaign did not respond to CNBC’s request for comment.

The striking thing about this proposal is it fails every score that you might make for tax policy.

Steve Rosenthal
Senior fellow at the Urban-Brookings Tax Policy Center

The idea of not taxing tips could also present a fairness issue for similar low-income workers who don’t earn tips, Rosenthal said.
“Why should someone whose compensation is a mix of tips and wages be better off after taxes than somebody who just gets wages?” he added.

The cost of no tax on tips

There are also critiques about the cost of the idea, particularly amid concerns about the federal budget deficit.
At Saturday’s rally, Harris called for no tax on tips and a higher minimum wage. The two ideas could collectively raise the deficit by $100 billion to $200 billion over 10 years, assuming the minimum wage increased from $7.25 to $15 per hour, according to an estimate from the Committee for a Responsible Federal Budget.

It’s unclear whether Harris’ and Trump’s plans would include an exemption from payroll taxes or just federal income taxes, which could impact revenue.
The cost could also be higher “depending on behavioral assumptions and avoidance questions,” Watson from the Tax Foundation said.

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Home equity is “not like bread,” said Greg McBride, chief financial analyst at Bankrate. “It won’t go stale if it just sits there,” he said.
But if you do have major home improvements or repairs, tapping home equity is a viable solution, experts say.

Iuliia Isaieva | Moment | Getty Images

Homeowners are sitting on $17 trillion in equity as of the end of the first quarter of 2024, according to CoreLogic. The average homeowner gained $28,000 in equity compared to a year earlier.
For many people, there’s no need to touch that money.

Home equity is “not like bread,” said Greg McBride, chief financial analyst at Bankrate. “It won’t go stale if it just sits there.”
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There is one exception, however: If you need to make major home improvements or repairs, tapping home equity can be a viable solution, experts say.

Home equity is ‘a less expensive borrowing option’

Among polled homeowners, 55% see home improvements or repairs as a good reason to tap home equity, according to a new survey by Bankrate. The site surveyed 2,294 U.S. adults, including 1,133 homeowners, in late June.
Using home equity is “certainly a less expensive borrowing option than resorting to personal loans or credit cards,” McBride said. 

As of Aug. 7, the current average home equity loan interest rate is 8.59%, according to Bankrate. The average HELOC interest rate is 9.37%.
To compare, the average personal loan interest rate is 12.38% , Bankrate found. The average credit card interest rate stands at 24.92%, according to LendingTree.

While cash from savings continues to be the most common way homeowners fund renovation projects, or 83%, credit card use has increased, according to the 2024 U.S. Houzz & Home Study. Houzz surveyed 33,830 homeowners of ages 18 and older from Jan. 19 to Feb. 27.
About 37% of homeowners paid for their repair projects with credit cards, up from 28% who did so in 2022, Houzz found.
While tapping equity is cheaper, it still has risks. Rates are higher given the Federal Reserve’s spate of rate hikes, and you need to go in with a plan to pay off the debt.

Remodeling can add value

Using home equity to invest in your home can make sense, said Jessica Lautz, deputy chief economist at the National Association of Realtors. Such projects not only help preserve the house, they may even enhance its value, boosting profits when you eventually sell.
The highest percentage cost recovered for exterior projects was from new roofing, at 100%, according to the latest Remodeling Impact Report by NAR. For interior projects, the highest percentage cost recovered was from refinishing hardwood floors, at 147%, and installing new wood flooring, at 118%, NAR found.

“We’ve found that hardwood floors have more universal appeal,” said Lautz. “For something like a roof, it’s a big project. … People may want to have that completed before they move into a home, make sure that the roof is in good working order.”

Tapping home equity for vacations, big purchases

More than 1 in 10 millennial homeowners said vacations or buying big-ticket items are good reasons to tap your home equity, according to Bankrate. But experts say this move is a “don’t.”
“If you have to finance the cost of your vacation, you can’t afford the vacation,” McBride said.
Plus, big-ticket items, such as a car or electronics, are depreciating in value from the point of purchase, he explained.
“You’re not only buying a depreciating asset, but you’re financing the purchase of that depreciating asset,” McBride added.

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While still resolving the challenges that have plagued this year’s rollout, the Education Department said the launch of the 2025-26 FAFSA will also be delayed.
For many families, financial aid is crucial when it comes to covering college costs, which have now crept into the six figures.
Reports show students and parents are turning to students loans even more.

By most accounts, the rollout of the new Free Application for Federal Student Aid, better known as FAFSA, was disastrous from the start. Even now, some college students don’t know the status of their aid awards for the fall.
“The Department’s poor planning has led to a stunning failure: Some college students might not have financial aid dollars in their hands in time to start classes in the next few weeks,” said Beth Maglione, interim president and CEO of the National Association of Student Financial Aid Administrators.

To avoid the same issues going forward, the U.S. Department of Education recently announced that the launch of next year’s federal student aid application form will also be delayed.

A ‘new approach’ for the 2025-26 FAFSA

The 2025-26 FAFSA will be available to applicants on or before Dec. 1, following a phased rollout starting on Oct. 1 to “identify and resolve the kind of system errors that can derail millions of students,” the Education Department said. (Typically, students have access to the coming academic year’s form in October.)
“Following a challenging 2024-25 FAFSA cycle, the Department listened carefully to the input of students, families, and higher education institutions, made substantial changes to leadership and operations at Federal Student Aid, and is taking a new approach this year that will significantly improve the FAFSA experience,” U.S. Secretary of Education Miguel Cardona said in a statement. 
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Higher education expert Mark Kantrowitz said he is skeptical that the department will be able to address all of the challenges that have plagued this year’s federal student aid application in the months ahead, not to mention next year’s form.

“Given that there are still more than two dozen unresolved issues from the 2024-25 FAFSA, it remains to be seen whether the 2024-25 FAFSA will be fully implemented by October 1 — or December 1 — let alone the 2025-26 FAFSA,” Kantrowitz said. 
“Just because the U.S. Department of Education says that it will get it done by December 1 doesn’t mean that they will get it done in time,” he added.

Families ‘are falling back on borrowing for college’

For many families, financial aid is crucial when it comes to covering college costs, which have now crept into the six figures.
The FAFSA serves as the gateway to all federal aid money, including federal student loans, work study and especially grants — which have become the most crucial kind of assistance because they typically do not need to be repaid.

In part because of issues with the new form, students are now relying on loans more, according to Sallie Mae’s recent How America Pays for College report. The share of parents taking out federal parent PLUS loans to help cover the costs of their children’s college education has also grown, other studies show.
“We’ve really seen that in times of economic hardship, [families] are falling back on borrowing for college,” said Jennifer Berg, vice president of public affairs for market research firm Ipsos, which partnered with Sallie Mae on the report.
“That’s when the FAFSA really plays a role,” Berg said.

To that end, it’s more important that the FAFSA is fully functional for next year, even if it means another delayed start, most experts say.
“The fact that we are still, to this day, dealing with the aftershocks of this year’s FAFSA rollout shows just how imperative it is that the process is thoroughly tested from end to end,” said the National Association of Student Financial Aid Administrators’ Maglione.
Although a reliable FAFSA trumps the postponement, “we acknowledge this is a difficult trade-off between functionality and the release date,” added Kim Cook, CEO of the National College Attainment Network — but it’s worth it as long as the FAFSA is fully operable by Dec. 1.
“Our students need to know they can afford college and stay on track to enroll,” Cook said.

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A long-awaited rotation out of tech and into small caps — a trend that kicked off a few weeks ago — could still have legs.
The long-talked-about soft landing may still be possible and rate cuts could deliver a cyclical recovery that benefits small firms.
It could also be worth taking individual positions in a handful of midcap companies that have underperformed this year but could benefit from further rotations out of Big Tech.

Traders work on the floor of the New York Stock Exchange during afternoon trading on July 26, 2024.
Michael M. Santiago | Getty Images

Stocks have endured a brutal stretch, with the Nasdaq now flirting with correction territory since reaching an all-time high on July 10. Even so, a long-awaited rotation out of tech and into small caps — a trend that kicked off a few weeks ago — could still have legs.
While all indexes have taken a beating in recent trading sessions, the Russell 2000 had shown signs of life before the so-called carry trade and worries about the U.S. economy disrupted its best run in years. A small-cap revival would unequivocally be a positive thing.

Indeed, coming after spikes in the S&P 500 and Nasdaq powered by a handful of companies perceived to benefit most from the boom in artificial intelligence, the increased market breadth may provide stocks the boost they need to overcome the recent rough patch.
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Two things need to happen for small caps to regain momentum.
The first is that the Federal Reserve will have to slash rates soon. That seems like a sure thing, with futures markets pricing in a probability of 100% of that happening in September. Notably, this level of certainty is largely responsible for sparking the rotation mentioned above in the first place. 
Secondly, we’ll need to see continued economic growth. This is obviously less certain, with July’s labor market data raising some concerns. Yet, the report is not as bad as some have made it out to be. Remember, recessions typically start with layoffs, which is not what the jobs report showed. The issue was more related to demand.

Therefore, the long-talked-about soft landing may still be possible and rate cuts could deliver a cyclical recovery that benefits small firms. The catch, though, is that these companies experience more volatility than their larger peers.
That’s why a fund tracking small caps is a smart bet. The iShares Russell 2000 ETF (IWM) is the largest one, which, along with the fact that it includes diversified exposure to many small companies, means the ups and downs are more muted.
However, it could be worth taking individual positions in a handful of midcap companies that have underperformed this year but could benefit from a further market rotation. One is Fabrinet (FN), a good way to play the increasing importance of data centers since it’s a leading contract manufacturer of optical components.
Silicon Laboratories (SLAB) and Synaptics (SYNA) are also attractive. Each produces discrete semiconductors, which, unlike integrated circuits, are individual units that perform specific functions. That’s an advantage because they can be more easily customized. 
Finally, Monday.com (MNDY) is also worth considering. It provides small- and medium-size businesses with a cost-effective, multipurpose alternative to expensive, single-use products such as Salesforce and QuickBooks.

One reason to doubt that a prolonged recovery for cyclically sensitive small caps is in the works: the price of copper. The metal usually goes up when cyclicals are poised for an extended rally. Copper prices, however, have fallen steeply since May.
Still, the performance differential between the Russell 2000 and S&P 500 during the spring reached 30 percentage points, a record. Since then, it has only recouped about 6% of that. Moreover, outside of the “Magnificent Seven”, valuations are reasonable. 
Therefore, once all the recent smoke clears and if it becomes apparent that policymakers can pull off a soft landing by cooling inflation and avoiding a recession, rates will come down and the rotation will continue, giving small and midcaps staying power.
— Andrew Graham, founder and managing partner of Jackson Square Capital. More