House View 1Q 2024
Good morning, and welcome to the House View for the first quarter of 2024. This House View summarizes our sense of the economic, financial, and investment landscape as we look forward to the rest of 2024 and 2025. We are predominantly US investors, although we have limited exposure internationally. Consequently, our House View is purposely US-focused. We conduct a relatively exhaustive quarterly comparison of the global investment opportunity set. There are scant justifications that lead us to reorient our view abroad. When, or if, that changes, we will adjust our allocations.
Equity markets were 10.2% higher for the first quarter than the fourth quarter of 2023, a remarkable quarterly gain. The driving narrative for equity and fixed-income markets was watchful waiting. Convinced that inflation and interest rates were at a cyclical peak, the pressing question was when rates were coming down and by how much. As 2024 burst upon the world, financial markets expected approximately seven rate cuts during the year, resulting in a year-end interest rate of 3.5%. As the quarter wore on, economic data revealed a US economy much more resilient than anyone expected. Consumer and government spending strengthened in the face of higher rates, mainly because the labor market has shrugged off layoff headlines from tech companies by quickly absorbing displaced workers and a flood of new entrants in the labor force.
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