The strong momentum from the last two months of 2023 carried into 2024. The S&P 500 rose 10.2% in Q1, the best start to the year since 2019 and the 14th-best since 1926. Gains were broad-based, with all seven major MSCI country/region indices, all nine Russell style boxes, and 10 out of 11 S&P 500 sectors ending the quarter ahead of where they started. Unlike late-2023, stocks did not get any help from bonds. The Bloomberg U.S. Aggregate Index slipped 0.8% in the first three months of 2024.

The narrative for much of 2023 was that a handful of mega-cap tech stocks were masking underlying weakness. For parts of the year, it was an accurate description. By early November, the median year-to-date return of eight broad asset classes was on pace to be negative for only the 10th time since 1972. The year-end rally changed the narrative. Not only did the S&P 500 surge 15.8% from its October 27 low into year end to bring its 2023 gain to 24.2%, but also gains were extraordinarily broad-based.

After a torrid start to the year, equities pulled back in the third quarter. Not only did the S&P 500 Index post its first negative quarter since Q3 2022, all nine Russell style boxes, nine out of 11 S&P 500 sectors, and five out of seven MSCI major country/region indices fell in Q3. Pinning the direction of the $43 trillion U.S. stock market on any one factor would be an oversimplification, but the overarching theme of the third quarter was the transition from relief that a U.S. recession was not imminent to uncertainty over what stronger-than-expected growth and potentially troughing inflation rates mean for monetary policy. The macro backdrop also explains why economically-sensitive commodities and the Energy sector outperformed while inflation-sensitive bonds underperformed in Q3.

Présentation macroéconomique autour des thèmes de l’inflation et du risque de récession aux U.S., les BRICS et la multipolarisation du globe ainsi que les enjeux stratégiques autour de l’énergie.
Pour nous éclairer, Louis-Vincent Gave, associé fondateur et CEO de Gavekal Research et Vincent Deluard, CFA, Directeur, Global Macro Strategy de StoneX ont partagé avec nous leurs analyses et perspectives d’un monde en pleine mutation.

One of Wall Street’s adages – the market does what it needs to do to prove the majority wrong – came true in the first half. Coming into the year, the NDR Crowd Sentiment Poll was in the midst of its second-longest streak of extreme pessimism on record, after 2008-09. The Bloomberg survey of 25 Wall Street strategists showed a negative S&P 500 target for the first time since its inception in 1999. In spite of or perhaps because of this pessimism, the market staged one of its best first halves on record. The S&P 500 jumped 15.9%, the best since 2019, second best this century and 12th-best since 1926. The quick recovery from the regional banking crisis brought skeptics off the sidelines.

Are we shifting, slowly but relentlessly towards a multipolar or at least a bipolar currency regime ? That highly strategic debate has been open for quite some time now which leads some observers to conclude – a bit hastily maybe – that this is some kind of never-ending story. In other words, the lack of truly credible alternatives to the US dollar implies, according to them, that the whole debate is bound to remain essentially theoretical, however convincing the arguments for enhanced polarity may objectively be and grow in credibility.

Contrary to a widespread belief, the true ultimate driver of long-term inflation is not commodity prices nor supply chain disruption. It is wages. That is because inflation is essentially a redistribution of wealth between owners of financial assets and other creditors on the one hand, to workers, producers of tangible goods or debtors on the other. Such redistribution depends on the balance of power between those stakeholders.