Emerging Investment Trends We Think Could Endure In 2024
We’re about six weeks into the new year, and the investment narrative has already started to take shape. Many investors seem to believe that the Federal Reserve and other global central banks will start to lower interest rates, but they remain on edge about the possibility that geopolitical tensions, supply chain disruptions and strong growth data might cause a fresh surge in inflation that disrupts those plans. We’re watching all of these developments, as the start of the year doesn’t always set the tone for what follows. So which trends are here to stay?
Inflation worries should continue to fade
We think the inflation worries that have marked the first few weeks of 2024 will continue to fade away. While that might not be obvious from the news, we are watching the bigger picture. Shipping costs are still 70% lower than their COVID-era peaks, and we believe that there is still more disinflation to come from both shelter prices and the labor market. Putting it all together, we believe that the worries about an inflation resurgence are misplaced, at least for 2024.
Health care and tech are poised for success
The technology and health care sectors are rallying, and we expected that trend to continue. For both, it all comes down to earnings, and long-term trends appear supportive. The still nascent expansion of GLP-1 weight loss drugs can potentially drive upside for health care. An increase in M&A activity and continued drug innovation could present additional tailwinds. Technology has emerged from its own earnings recession, and we expect the sector to generate mid-teens earnings growth through 2025 with the global artificial intelligence trend to be a major factor here.
M&A wave is here to stay
Another trend that we expect to continue is increased merger and acquisition activity. With less macroeconomic uncertainty, lower interest rates and higher equity valuations, management teams appear to be…
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