Download the 2024 mid-year investment commentary.

2024 Mid-year Investment Review

In the first half of 2024, we saw continued volatility in the markets, with the Federal Reserve staying put and maintaining their “hold” on cutting interest rates. Going into the beginning of 2024, most forecasters were looking for rate cuts to begin in March or May. Talk has now shifted to the first cut likely to occur in September. It is anticipated that the Fed will decrease rates two to three times by year-end.

The concentrated tech names continued to lead, with the S&P 500 Growth Index up 23.5% and the S&P 500 up 15.29% (June 2024 YTD). U.S. economic growth has continued to be robust, while unemployment has only slowly moved higher, ticking up to 4.3% in July. Combined with the rate of inflation remaining higher than expected, the Fed has been in a position of uncertainty. It is still unclear at this point whether inflation will move back up or if the economy will begin to decline. This has generated an environment where interest rates have been relatively stable, giving markets room to run higher.

The Presidential race has taken a quick turn, with President Biden dropping out and competition tightening amongst the political parties. While the outcome is unknown, either party winning has the potential to produce inflation. The big difference between each party’s policy will be around renewing individual income tax rates for those above $400,000 per year.

Looking ahead, we continue to see pockets of weakness and strength in the U.S. economy. Wealthier households are seeing their assets grow, while lower-income households are feeling the impact of rising prices for goods and services. We are also observing higher U.S. debt levels that have the potential to lead to slower growth and higher long-term rates, barring a major recession. The anticipation of the Fed cutting rates has been a strong tailwind for equity markets, as we are in a period of likely lower rates with a low probability of a recession. As we know, that can change quickly, but in the meantime, it has been a good ride.

• Macro Overview
• Divergent Economy
• Credit
• Equity
• Private Equity
• Portfolio Market Positioning

2024 Year-end Outlook

As we’ve suggested, we anticipate a Federal Reserve rate cut in September as employment weakens and inflation edges closer to the 2% goal. At the time of publishing this commentary, there has been a lot of news about the U.S. markets selloff and the unwinding of the Japanese Yen carry trade. We are already seeing the markets stabilize, refocusing the conversation around if and when the U.S. might enter a recession.

Presently, the U.S. economy is still expanding and though  the chances of a recession are slim, historical data reveals the challenges of accurate prediction by both forecasters and the Federal Reserve. We persist in seeking opportunities to diversify portfolios and establish a resilient allocation, avoiding the need to chase forecasts. Our focus remains on long-term strategies, without any compelling reasons for drastic asset allocation shifts.

Download the 2024 mid-year investment commentary.