Interview, Other
America Powers On: Why US equities are still poised to outperform in 2024
- U.S. economic outperformance similar to 2023 is not expected due to high starting levels, with the base case for S&P 500 growth projected at approximately 6%, while a good case scenario anticipates returns in the low teens to mid-teens.
- Global equity projections forecast the MSCI All Country World Index at roughly 7%, with Japan and other non-U.S. developed markets targeting around 8%, alongside an expected period of multiple contraction in U.S. equity markets.
- Fixed income and cash alternatives are forecast to generate returns of 4% to 5% for bonds and approximately 5% for cash.
- China's GDP growth is expected to average 3.4% annually over the next decade before declining to roughly 2.5%.
- Uranium prices are anticipated to appreciate due to supply shortages caused by increased Chinese nuclear construction and Japanese facility restarts.
- Oil prices face potential upward pressure from market sentiment and risk premiums, even in the absence of physical disruptions.
- The escalation of the Israel-Hamas war is identified as the primary risk to the 2024 economic and financial outlook.
- U.S. equities currently trade in the 10th decile of valuation, indicating they have been cheaper than the current price point 90% of the time historically.
- The U.S. maintains the world's highest labor productivity and corporate management quality according to third-party research, while also serving as the largest exporter of oil, natural gas liquids, and liquefied natural gas.
- Tax implications for taxable U.S. investors suggest a 20% equity market drop is required to offset the capital gains tax burden incurred when shifting assets from equities to bonds or cash.
- Investors moving assets from U.S. equities to fixed income or cash to lock in gains will face significant tax burdens.