- Extending the expansion U.S. economy
- Assessing the market impact of the 2024 presidential election U.S. elections
- Growth convergence, but central bank divergence International economy
- A slow dance downward Fixed income
- An extended, more inclusive bull market U.S. equities
- The rest of the world’s comeback International equities
- Embracing the alternative advantage Alternatives
- (Continue to) expect the unexpected Asset allocation
After a stretch of strong investment returns, the 2024 presidential election adds an extra element of uncertainty for investors.
International economic data have begun to inflect upwards, with further room to run given still below trend consumption and lower inflation. Positive economic surprises suggest peak pessimism about international. More progress in disinflation in some corners mean some central banks moving before the Fed, keeping the dollar elevated.
Given the swift repricing in policy rate expectations that occurred in the first half of the year, we expect long term interest rates to generally stabilize for the remainder of this year. However, given the shallow path of expected rate reductions in the years ahead, the yield curve is likely to remain inverted for some time, suggesting active management around duration and credit are key.
After a strong run in U.S. equities, the backdrop remains supported by healthy earnings growth, increased investment in AI and a wave of buyback announcements. Opportunities remain, but valuations are not cheap and return expectations should be more modest from here.
U.S. concentration within global equities is extreme, but other markets have begun to catch up. A positive cyclical turn, combined with structural tailwinds and cheap valuations, suggest more strong performance to come, with more of a broadening out by company and region than seen thus far.
Through diversification, inflation protection and alpha generation, opportunities in alternatives can help better prepare portfolios for challenges that may lie ahead.
Despite significant uncertainty, the outlook for the rest of 2024 remains constructive, though investors would do well to broadly diversify across high-quality assets.
