During the last few months of 2023, financial markets performed very well because of the expectation that interest rate cuts would soon be upon us. Central banks’ objective of an economic “soft landing”, while at the same time reducing inflation, so far seems to have been achieved. The markets are now expecting between 5-6 interest rate cuts (each cut is typically one quarter of one percent) in 2024 – with the first cut expected in the springtime. Our view is that the interest rate cuts will be gradual, that the central banks will not take their ‘foot off the brake’ too quickly, to avoid a re-acceleration of inflation. If interest rates were to be cut very quickly, it would likely mean that the economy is doing much worse than expected. The continued recent strength of labour markets indicate that the economy will likely remain relatively strong and the interest rate cuts will be gradual.
Elections
2024 will be an eventful year for elections. There will be votes in over 75 countries, representing about half of the world’s population. A few notable countries include Taiwan, India, Mexico, Russia, the UK (potentially) and the US. The US elections will likely receive the most attention, with primaries beginning this week. Importantly, interest rates may play a role in the US election. If interest rates do in fact decrease as expected, it would likely be positive for the incumbent Democrats. Importantly, regardless of which party is in power, financial markets have typically performed well in US election years. Below is a timeline of many important elections in 2024:
Middle East
We continue to pray for the return of all hostages in Gaza and lasting peace for the whole region.
Pearlstein Wealth Update
We are excited to announce that Alicia has recently returned from maternity leave. Carmen is expected to return in the spring/summer this year. Both of their baby boys are doing very well! Also, Sanam is no longer part of our team. We wish him success in his future endeavors.
Wishing everyone a happy and health 2024.
Pearlstein Wealth
