The U.S. equity market started the year strong on the backdrop of a robust economy and decreasing inflation. In our 1Q 2024 commentary we delve into the key drivers behind market performance, focusing on three critical questions:
1. What Is happening with interest rates? The Federal Reserve expects three rate cuts this year, but there is wide dispersion among officials regarding the trajectory of rates.
2. Are we worried about the narrowness of the market? The outperformance of the Magnificent 7 has skewed market metrics. However, we believe there are opportunities for active management outside of the large cap space.
3. How much growth is due to exogenous shocks? We analyze external factors influencing market dynamics and their implications.
