At the top of our Christmas wish last year was to see an end to further interest rate hikes from the Federal Reserve (Fed). We must have been on Santa’s naughty list again this year because while the Fed has not raised rates since July, it has increased the fed funds rate a cumulative 100 basis points (bps) in 2023 while also leaving the chimney open to further hikes, if needed .

With 2023 effectively “wrapped” up, consensus does not expect any additional rate hikes from the Fed’s current tightening campaign. Instead, the focus has shifted to predicting the path of the business cycle in 2024. Will it be a “soft landing” with a continuation of slowing global growth, or a “hard landing” in the form of an economic recession? Regardless, we believe landing the economic sleigh will be challenging, especially in the face of still-elevated inflation, a tight labor market and contracting leading economic indicators, all in a presidential election year.

The good news ringing in the new year is that for the first time since the pandemic, we expect monetary policy to play a smaller role in shaping markets in the months ahead — a welcome change. Instead, we have another market catalyst in mind for Santa in 2024. Topping our Christmas wish list this year is…an earnings reacceleration!

All I Want for Christmas - 2024