Corporate

The recent decline in yields has powered European equities higher, however, this rally cannot last if earnings decline meaningfully. With this in mind, are our earnings models flagging risks for stocks next year?

Global Investment Strategy predicted the surge of inflation in 2021/22 and the immaculate disinflation of 2023. Now their unique framework is predicting a recession in the second half of 2024.

We expect the US economy to slow and potentially downshift into a recession sometime in 2024, as tighter monetary policy weighs on consumers and businesses. In addition, (geo)political tensions may increase market volatility. The risk/return for US equities is unfavorable. We recommend that our clients reduce portfolio beta and increase allocations to defensives and quality growth.

We enter 2024 as we were across the last four months of 2023, tactically equal weight across the board until the S&P 500 rally is complete and we gain a better entry point for underweighting equities and overweighting fixed income.

Today, we are sending you the BCA annual outlook for 2024. The report is an edited transcript of our recent conversation with Mr. X and his daughter, Ms. X, who are long-time BCA clients with whom we discuss the economic and financial market outlook for the next twelve months toward the end of each year.