UBS On-Air: Market Moves
Talking Markets: Year-Ahead edition with Steve Chiavarone of Federated Hermes
Dec 13, 2023
Steve Chiavarone, Head of Multi-Asset Solutions, Equity Strategist, and Senior Portfolio Manager with Federated Hermes, discusses his macro and market expectations for 2024, including the risks and headwinds facing markets. They explore topics such as the U.S. economy, rate cuts, allocation within fixed income, investing in quality and selective dividend payers, and non-US investment opportunities.
15:56
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Quick takeaways
- Factors such as the refinancing of corporate debt, variable rate bank debt for small businesses, and the contrasting situations of high-end and lower-end consumers will shape the U.S. economic landscape in 2024.
- As the Fed pauses its rate hikes, historically, this has been a positive period for the market, with the S&P tending to hit new all-time highs and an average return of 14% between the last hike and the first rate cut.
Deep dives
Expectations for the U.S. Economy in 2024
As we head into 2024, there is uncertainty surrounding the trajectory of the U.S. economy. Factors such as the refinancing of corporate debt, variable rate bank debt for small businesses, and the contrasting situations of high-end and lower-end consumers will play a role in shaping the economic landscape. Additionally, the tightening lending from banks and the need for the government to roll a significant amount of federal debt in the next year contribute to the potential challenges. While a classic recession is not in the base case, a modest pressure on economic growth and inflation is anticipated, resulting in single-digit equity returns and a relatively unexciting market.
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