Wealth Outlook 2024 - Slow then grow

6 Wealth Outlook 2024 | Our outlook Taking advantage of the markets’ big reset This is a good time to be a global investor, maybe even a very good time. If you find that hard to believe, you are not alone. In 2023, we have seen moments when investors were absolutely sure that equities were headed lower (September) and when investors were absolutely sure that rates could only go higher.¹ ¹ In the University of Michigan survey, a historical record high 88% of respondents in April said interest rates in the coming year would rise. In the American Association of Individual Investors poll, the net bullish % of investors was -43.1% in the week of September 21, the lowest level since March 4, 2009. In both cases, investor sentiment proved wrong. Nevertheless, as of the week ending November 15, investor confidence as measured by the American Association of Individual Investors stood at 16% net bullish, hardly a ringing endorsement for the future.² ² The AAII Investor Sentiment Survey, www.aaii.com/sentimentsurvey. With war in Ukraine and Israel, tensions ongoing between the US and China, impending contentious presidential elections in the US and six other countries, gridlock in the US Congress and abounding doomsday scenarios about the impact of artificial intelligence (AI), it is not easy to have a clear vision on the direction of markets. Meanwhile, 5% annualized short-term rates are distracting investors, encouraging them to quietly become market timers. Clear thinking and wise analysis This is a moment when facts, data, clear thinking and wise analysis matter most. Our conclusions may surprise you. However, they are not optimistic. They are realistic. Here is what we see: • Inflation is coming down. Wage growth is moderating, even in services. • Employment growth is slowing. • The US economy is more resilient than many expected. • Some US industries suffered a “rolling recession” in 2023. These sector contractions will roll out in 2024. Though the new year will initially see a slowdown in growth, there will be no broad-based economic collapse. • For many sectors and markets, equity valuations are more reasonable than investors believe. • Corporate profits are rebounding and are likely to hit an all-time high in 2025. • High short-term interest rates today are unlikely to be available tomorrow. The same is true for longer- term rates. Investors should not assume that they will be able to maintain rates as they roll over short- term Treasurys and bonds. • As rate pressures recede, the US dollar is likely to decline. This could help set the stage for stronger global growth in 2025. • Market timing is a bad strategy.