Europe
The major question facing EM investors in 2024 is whether or not EM will cross the Rubicon. The path to a soft landing in the US remains elusive. The recent improvement in global manufacturing/trade will likely prove to be a mid-cycle bounce rather than the beginning of a cyclical recovery.
Political economy dominates fundamentals going into 2024, as states prepare for war and de-risk supply chains. Asynchronous global growth will elevate commodity-price volatility. We expect oil to trade above $100/bbl in 2024 and continue to favor equity exposure to oil-and-gas producers. Given weak capex, we also favor metals miners and refiners. We remain long the Gold, the XME and COMT ETFs We were stopped out of our XOP ETF with a 12.5% gain; we will re-establish it at tonight’s close.
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.
