If the consensus on Wall Street is often wrong (and 2023 evidence does little to dispel that notion: Then, in the coming year, investors will face either the mother of all rallies or a sell-off that will last for centuries.
This is because most investment outlooks from major banks, advisors and asset managers foresee the same intermediate scenario in 2024: they see interest rates finally starting to kick in, a benign economic slowdown and a central bank . turn towards easier policies setting the stage for a rebound at the end of the year. Stocks and bonds, which rallied strongly in the final weeks of 2023, are expected to post mostly positive but disappointing gains.
It is not the only result presented in the more than 650 calls gathered here by Bloomberg News, but it is the predominant opinion. Amundi, JPMorgan Asset Management and Vanguard are among those predicting “mild” recessions. For BNY Mellon Wealth Management it will be “a healthy and welcome slowdown.” Barclays calls it a “soft” landing.
In that context, most companies emphasize the need to look for quality in stocks, diversify across sectors and regions and take advantage of some of the best returns in the fixed income space in recent times.
Yes, according to some, it is the year of bonding, again. With elevated rates and cuts on the horizon, fixed income appears ripe for both capital appreciation and yield harvesting, says JPMorgan Asset. “Inclination toward fixed income,” says Franklin Templeton. “Bonds have their moment,” proclaims BNY Mellon Wealth.
The obvious problem: that was also what almost everyone predicted. last year. But Wall Street got it terribly wrong in 2023, when bonds plunged for months in the face of relentless rate hikes and stocks surged in an AI frenzy.
So the strategists are going from one of their most humble years to surely one of the most difficult. The next 12 months will determine the end of the battle against rampant inflation, the fate of the current economic cycle and the political leadership of half the world economy, to name just a few. Perhaps that is why many of the forecasts are so cautious: few want to make an important decision in such a delicate year.
So what about outliers? They are generally skewed to the downside, which is consistent with the fact that most companies see risks skewed to the downside. Robeco warns that the current consensus is nothing more than a “fairy tale.” BCA Research believes that the macroeconomic outlook is more worrying now than 12 months ago. Deutsche Bank is preparing for a hard landing in the United States.
But there are some bulls. UBS Asset Management says that if its soft landing base case scenario is achieved, “global stocks will comfortably climb to new all-time highs in 2024.” Commonwealth Financial Network hopes that a Goldilocks economy will offer an “ideal state” for financial markets.
There is something that almost everyone agrees on: American elections It is impossible to call. Many companies like Citi and HSBC say it's too early, others simply warn to expect volatility. Kudos to UBS, therefore, for outlining a specific potential scenario: a stalemate between Trump and Biden, with a third-party candidate holding the balance, or even the decision reaching the House of Representatives.
Here's what the financial world's best and brightest see in the year ahead.
