Q1 2024 equity market outlook
Five charts on the key indicators we are watching as we head into 2024
Global Concentrated Alpha outlook summary
Global Concentrated Alpha outlook summary
- Since the Fed pivot, the equity market has moved to become further risk-on and has fully embraced a soft landing. The belief in a soft landing is not a good indicator of what happens next, given it was particularly strong in 2000 dot-com crash
- The Fed pivot is no surprise to us and comes remarkably late versus history, making it the first Fed to continue hiking post the peak in inflation
- Meanwhile, we see a further slowing of economic growth and expect US consumption to slow into 2024. This comes as excess savings from covid and stimulus support are depleted and savings rates are generally low versus historic levels
- The boom of AI in industrial production happened over a decade ago. The boom in generative AI is happening today. However, its effects are hard to judge and possibly overestimated. Of note, imports of chipmaking equipment to China have tripled over the last 10 months, likely driven more by fear of supply rather than large AI investments.
Figure 1: “Soft landing” story count not a good indicator of final outcome
Figure 1: “Soft landing” story count not a good indicator of final outcome
Figure 2: The first Fed that kept hiking post inflation peak
Figure 2: The first Fed that kept hiking post inflation peak
Figure 3: Households seeing more need to save
Figure 3: Households seeing more need to save
Figure 4: Spending intentions are slowing
Figure 4: Spending intentions are slowing
Figure 5: Unsustainable semiconductor equipment demand?
Figure 5: Unsustainable semiconductor equipment demand?
