4 Key Quotes: Wellington Altus 2024 Forecast
The U.S.’s Tech-Driven Reinvention
Dr. James Thorne, Chief Market Strategist at Wellington Altus provides his outlook for the markets in 2024 (Source: 2024 Forecast - The U.S.’s Tech-Driven Reinvention)
4 Key Quotes:
“As we venture into 2024, investors should prepare for 150 basis points (bps) of rate cuts, a return to the pre-pandemic deflationary structural forces—such as significant debt levels—fluctuating globalization, demographic influences, and accelerating digitization.”
“Inflation fears will give way to concerns about economic growth and deflation, triggering interest rate reductions.”
“A technology wave not seen since the mid 1990s—with the start of the internet and the mass adoption of the personal computer—is about to transform our global economy. Unlike the 1990s, however, innovation can be found in every sector. Companies that embrace digitization, irrespective of industry and geography, will be the ones that gain market share in the coming slow growth environment.”
“As we enter an era of exponential technological growth, we find compelling reasons for preferring the U.S. over Canada, and the NASDAQ-100 over the S&P/TSX Composite Index. Simply put, productivity growth in the U.S. is significantly stronger than in Canada.”
Summary of 2024 Forecast
1. The U.S. economy should achieve a soft landing, whereas the Canadian economy could face a hard landing.
2. Below trend economic growth, rapidly declining inflation, interest rate cuts, and a stop to quantitative tightening.
3. Long duration assets will outperform. Cash as an asset class will underperform.
4. Investor fears will shift from inflation to growth and deflation as we head back to secular stagnation.
5. Forecast 150 bps of rate cuts with a bull market for bonds, banks and home builders.
6. By the end of 2024, the S&P 500 Index will hit the target of 5400.
7. NASDAQ-100 will outperform the S&P 500, which will outperform the TSX.
8. Uranium bull market will continue, along with a run in gold as the Federal Reserve cuts interest rates.
9. Oil trades between US$70 and US$90.
10. Bitcoin bull run will last until late in the third quarter of 2025.
11. Federal Reserve will start cutting interest rates in the second quarter of 2024.
12. Bank of Canada will cut interest rates before the Federal Reserve, with the overnight rate reaching the terminal rate by the second quarter of 2025.
13. U.S. Federal funds rate will hit terminal rate of 2.5 per cent by the fourth quarter of 2025.
14. In the next two years, we will find out if interest rates settle at the pre-GFC or pre-COVID-19 level.