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Jim Caron believes markets could rally in 2024 as inflation eases and economies stabilise
Invest
Jim Caron believes markets could rally in 2024 as inflation eases and economies stabilise
The financial markets could be gearing up for a major comeback in 2024, according to Jim Caron, Chief Investment Officer of Portfolio Solutions at Morgan Stanley Investment Management.
Jim Caron believes markets could rally in 2024 as inflation eases and economies stabilise
The financial markets could be gearing up for a major comeback in 2024, according to Jim Caron, Chief Investment Officer of Portfolio Solutions at Morgan Stanley Investment Management.
In his latest podcast, Caron suggests that uniform growth across financial sectors may be on the horizon with potential easing in financial conditions.
Caron, on expectations for the upcoming year, stated, "Analysts are predicting that, firstly, inflation is likely to keep falling, secondly the Fed, ECB and other central banks are priced to cut interest rates and finally, global equities may return in the 5 - 7% area as a soft-landing/no-recession call for next year is becoming more mainstream."
This anticipated shift towards a soft landing or a mild recession suggests that market volatility could decrease, benefiting carry and income strategies, while also boosting the performance of stocks and bonds. Caron compared the potential market recovery to a famous line from rapper LL Cool J, emphasizing the element of surprise: "Perhaps it's time for broad financial asset markets to uniformly perform well and make a comeback? Well as LL Cool J once said, Don't call it a comeback."
Yet, Caron is also aware of the potential issues that could influence economic and market conditions. He acknowledges an array of concerns, including geopolitical tensions, the impending U.S. presidential election, and the economic dilemmas faced by China and Europe.
"The U.S. consumer has less in savings, in part due to a decreasing amount of fiscal stimulus tailwinds," Caron noted, outlining reasons for caution amidst optimism. "This puts downward pressure on corporate revenues and puts upward pressure on unemployment. Furthermore, margins can narrow and earnings may struggle to even beat easier comparables."
Despite acknowledging the economic and political uncertainties ahead, Caron remains optimistic about the investment landscape, endorsing a balanced and actively managed approach. "I am still optimistic on the outcome for returns in the year ahead. Investors should start with a well-balanced portfolio and actively manage the risks and opportunities."
The takeaway from Caron's analysis is clear: while 2024 could present its own set of challenges, there are also reasons for hope. With Caron stating, "We have fat tails ahead of us, both up and down, and should play them against the middle for a modestly positive return in 2024," it seems that for investors who navigate carefully, the year ahead may hold potential gains.
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