A Conversation with Ben Laidler
This month we spoke with Ben Laidler, a Global Markets Strategist at eToro. Ben offered his perceptive predictions for the markets in the new year, including how investors should position themselves in advance of 2024 as well as what he most looks forward to.
What’s your outlook for 2024? Recent dramatic falls in inflation across much of the world are the key to a positive 2024. This will allow central banks to start cutting interest rates from current high levels on both sides of the Atlantic, sooner and, to a greater extent than thought possible only a few months ago. These lower rates will support economies, stock market valuations, and help boost company profits growth to double digit levels.
What key thematic opportunities will be in sharp focus in the coming year? We see four key differences vs last year: 1) Stock market returns may be positive but lower, given already high US valuations; 2) Returns may be back-ended as investors wait for central banks to start cutting; 3) Market leadership may be different, led by the lagging and cheaper cyclicals most sensitive to rate cuts; 4) Unloved European and Emerging Markets may disproportionately benefit vs the US stock juggernaut.
How should investors position themselves for the year ahead? The biggest investment call of the year is the accelerating rotation underway from the supersized US market and its big-tech defensive growth winners of last year toward the cheaper and more out-of-favor assets that are most sensitive to the forecast economic soft landing and interest rate cuts. This includes real estate, financials, and small caps, through to Europe and Emerging Markets.
What are you looking forward to most in 2024? Politics, company profits, and recession are the three-headed risks for the year. A historically high 40% of the global economy faces elections this year, book-ended by Taiwan and the US. Earnings are set for an idiosyncratic recovery, driven by AI, lower inflation, and a depressed base, despite weaker economies. Whilst recession fears are buffered by resilient job markets and central banks now able to cut rates.
