Outlook For Pause Turns To Cuts
- The members of the Federal Reserve Open Market Committee (FOMC) “pivoted” to a more dovish stance in their last meeting of the year on December 13, holding rates steady and signaling that the inflation outlook has improved more quickly than anticipated. They also suggested three potential rate cuts in 2024. – Apollo
- Inflation retreated further in November and consumers picked up their spending as moods improved, forecasters said, adding to signs that price pressures can be contained without a recession. Economists surveyed by The Wall Street Journal estimate that the core personal-consumption expenditures price index, which excludes volatile food and energy categories, rose 0.1% in November from the previous month, a slowdown from 0.2% in October. That would be the slowest rise since August. On the year, they estimate core inflation cooled to 3.3% in November, from 3.5% in the previous month. – WSJ
- Multiple expansion despite flattish earnings confounded most investors even as a much-anticipated recession did not materialize in 2023. Investors enjoyed falling long-term interest rates in the back part of the year, even as the Fed raised multiple times reaching the 5.25% level. Equity concentration accelerated with the Magnificent 7 far outpacing the average stock. Volatility levels were low most of the year, especially for stocks. By year’s end, investors were counting on Fed rate cuts early in 2024 to validate the multiple expansion. – Crossmark
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