Raymond James' 10 Themes for 2024
Friends – As we move into 2024, I wanted to continue an annual tradition and share some highlights from Raymond James’ “Ten Themes for 2024” from our excellent Chief Investment Officer, Larry Adam and his team.
This year, after a strong recovery in 2023 and with a presidential election on the horizon, Larry and his team’s list is particularly timely, with helpful perspective on how to capitalize on opportunities across various asset classes. I’ve summarized their themes below. If you’d like to view the full presentation, you can view a replay of a recent webinar where Larry presented these themes.
- Economy – The most talked about recession in history has yet to materialize. Larry still believes that a recession will start in 2Q24 as consumer spending weakens. However, as other subsects of the broader economy have already experienced a contraction, it will likely be the mildest ever, affecting the economy unevenly. Even with a mild recession, a recovery by year-end should help U.S. GDP warm to a 1% growth rate for 2024.
- Monetary Policy – A restrictive diet of interest rate hikes appears to be at an end. Now, the Fed will turn its attention to ‘fattening’ the economy through rate cuts as concerns of slowing growth mount (i.e. a modest rise in unemployment and a potential recession). Markets are hopeful over the possibility of as many as six rate cuts, however Larry believes that is overly optimistic and expects three or four cuts in 2024.
- Fixed Income – Larry expects the 10-year Treasury yield to fall to 3.5% in 2024 and favors investment grade corporates and municipals over the lower-rated segments of the market.
- Equities – Investors will need to be more discerning in 2024 with their sector, region, style and market capitalization choices. That’s because a lot of the good news has already been priced in and the market may be set up for disappointments. At $245 earnings per share, he believes consensus expectations are too frothy, and expects earnings growth to be only 2% to $225 for 2024, with a year-end target of 4,850 for the S&P 500.
- Equity Sectors – Innovations in technology and health care, along with continuing government spending and reshoring connected to industrials, will be strong tailwinds for these sectors in 2024.
- Small Cap Equities – Small caps are undervalued compared to large caps and historically perform well coming out of a recession.
- International Equities – Europe remains weak but selectivity in emerging markets may yield favorable results for investors.
- Energy – We believe energy production discipline will continue to limit the growth of the oil supply, pushing the price per barrel for WTI crude to $85.
- Volatility – Super-hot market expectations meeting cooler reality could contribute to increased volatility. There is also a U.S. presidential election and more than 40 key elections around the world.
- Asset Allocation – Larry is factoring in modest upside for most asset classes in 2024, but warns to not let a so-called ‘everything rally’ distract you from maintaining a commitment to a well-structured asset allocation.
If you’d like to discuss how these themes relate to your personal planning, let’s connect. I’m happy to help.
Best,
CAMERON DIEHL, CFP®, CPWA®
Private Wealth Advisor
