The year is nearly at an end. There has been strong risk-on sentiment, largely due to the Federal Reserve’s seemingly dovish rhetoric. Let’s briefly look at that. And, below, premium subscribers will find analyst consensus forecasts and an overview of what is currently in my portfolio.
Market in brief
The United States shows signs of a soft landing: Jerome Powell noted that the Summary of Economic Projections points towards rate cuts in 2024, taking the Fed Funds Target Rate from 5.25-5.5% to 4.6%, according to the dot plot median.
Jerome Powell also suggested that the economy will remain relatively resilient, with GDP growth decelerating but remaining positive. Unemployment will only increase slightly to around 4% and inflation will moderate.
The Federal Reserve’s statements have led to speculation that rate cuts might occur.
Outside of the United States, the situation is less positive. The ECB and Bank of England have indicated they will keep rates higher for longer. The ECB has flagged quantitative tightening.
Australia is struggling with poor retail sales (which declined m/m in the latest reading), declining labor productivity, falling GDP-per-capita, and inflation that remains too high at 4.9% (in the latest monthly reading.
The position into 2024 appears to be largely constructive. However, caution is necessary. Equity valuations are high. Markets appear to price in several rate cuts, which downplays both (a) the uncertainty of those rate cuts, and (b) the fact that they could be several months in the future. The market is also vulnerable to shocks, such as disruptions to supply chains in the red sea.
Analyst forecasts and my portfolio
What then is in my portfolio and what are analysts forecasting?
Note that I am disclosing my portfolio in case you are interested and in the interests of transparency. This is not to advocate for any specific position. It is so you can evaluate my trading activity and form your own judgment.