At a time when many experts predicted a recession, GDP growth is running at roughly 3%, inflation has fallen close to the Federal Reserve’s 2% target, and unemployment is hovering at a lower than average 4% rate.
Major equity indices continued to rally in the second quarter, though a closer look reveals a stark divide between the handful of large cap US tech stocks led by Nvidia that kept rising, and the rest of the market, which has spent the past three months treading water. Bond markets ended the quarter little changed.
Global stocks rallied in the first quarter of 2024, with markets in the US, Japan, Europe, and Latin America hitting all-time highs spurred by stronger than expected economic growth.
2023 was a far better year for investors than the chorus of gloomy Wall Street forecasters had predicted, with both the bond and stock markets posting strong gains. This leaves investors with a hopeful outlook heading into 2024.
The third quarter proved challenging for investors, as a tug of war emerged between the economy’s surprising resilience and the Federal Reserve’s determined campaign to lower inflation. While bond markets continue to slump in response to rising interest rates, surging investor interest in artificial intelligence drove soaring returns for the largest tech stocks.
During the first half of 2023 financial markets defied the chorus of forecasters who anticipated that crippling interest rates would soon lead to earnings declines, recession, and investment losses. Overall, investors enjoyed better than usual returns despite relentlessly negative media headlines.
The first quarter of 2023 generated positive returns for both stock and bond investors despite turmoil in the banking sector and the failures of Credit Suisse, Silicon Valley Bank, and Signature Bank. Inflation has drifted lower and the Federal Reserve has begun to tone down its hawkish language, suggesting an easing of monetary tightening with fewer and smaller interest rate hikes in the future. Corporate profits have remained strong, and the employment market has been surprisingly robust in the face of a gradually slowing economy.
December 2022 marked 20 years since LongView was founded. During these two decades, we have weathered many historic challenges together. Through all these ups and downs, we have strived to maintain a steady hand, preserving and growing our clients’ portfolios by adhering to fundamental investment principles and keeping our eye on your long-term goals.
Global markets have left investors with few places to hide in 2022. Stubbornly high inflation has sparked the most aggressive interest rate increases by central banks in decades, contributing to concerns about recession. Nevertheless, we encourage you to hold tight, knowing that things will get better, that much of the downturn is already behind us, and that bear markets do not last forever.
Financial markets saw a widespread increase in volatility during the quarter, with large daily price swings. Although the global economy continues to rebound from the pandemic-induced recession, early indicators suggest that ongoing supply problems, inflation, and central bank tightening, are hampering the pace of recovery.
So far 2022 has presented the most challenging environment since the financial crisis of 2007-2009, and markets could fall further from here. Nevertheless, the bear market in stocks and bonds has brought prices down to levels that are beginning to attract the interest of long-term investors. We believe the coming year will offer a host of opportunities for investors who aren’t derailed by volatility and who remain committed to their long-term investment plans.
For a year that began with the storming of the US Capitol and a worsening supply chain crisis, then proceeded through a series of devastating natural disasters, and ended with soaring inflation and a dramatic surge in COVID cases, 2021 was remarkably generous to investors.