Macroeconomic Committee

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Market Outlook Spring 2025

In our outlook for 2025, we wrote about the following factors that we thought would impact investment returns this year: Artificial Intelligence Investments and Commercialization of AI Applications, Labor Market Conditions, Inflation, and Fiscal and Monetary Policy. We provide our latest thoughts on each of these topics in this update, after a quarter characterized by a lot of market-moving news and a corresponding increase in stock market volatility.

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Market Outlook Winter 2025

Our outlook for 2025 is based on the following factors that we believe are most likely to impact investment returns: Artificial Intelligence Investments and Commercialization of AI Applications, Labor Market Conditions, Inflation, and Fiscal and Monetary Policy.

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Market Outlook Fall 2024

The outcome of the Federal Reserve’s aggressive inflation-fighting campaign launched in 2022 is coming into sharper view. Inflation has declined from a peak of over 9% in mid-2022 to 2.5%, unemployment has increased by just a small percentage and remains near the low end of its range over the last 50 years, and theU.S. economy has continued to grow. When the Fed began its inflation fight back in 2022, few economists thought such an outcome was possible, but restoration of inflation back to about 2%, low unemployment and continued good economic growth is now very much the consensus forecast.

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Market Outlook Summer 2024

In our 2024 outlook that we distributed in January, we wrote about what we thought would be the most important factors hat would impact investments in 2024, including: (1) Will inflation continue to fall as expected towards theFed’s 2% target?(2) Will there be a recession?At the halfway point of 2024, we update our inflation and economic outlook based on new information and assumptions.

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Market Outlook Spring 2024

In our Winter 2024 outlook, we wrote about what we thought would be the most important factors that would impact investments in 2024, including:
(1) Will inflation continue to fall as expected towards the
Fed’s 2% target?
(2) Will there be a recession?
In January, a large majority of investors believed that the Fed would successfully bring inflation down from a very high level to near its 2% target by the end of 2024 while avoiding a recession. In this update, we analyze recent inflation and economic data and provide our opinions as to how it changes the outlook.

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Market Outlook Winter 2024

As we start 2024, we make the following observations about what we believe are the most important uncertainties that will impact investments in 2024. (1) Will inflation continue to fall as expected towards the Fed’s 2% target? (2) Will there be a recession? (3) Will artificial intelligence adequately deliver on its promise in 2024?Notably, investors’ opinion on the first question is resoundingly “yes.” Investors’ opinion on the second question has shifted during the last several months and there is now a strong consensus opinion that the answer is “no.” Based on the performance of technology stocks in 2023 and high relative valuations, it seems clear that investors expect a lot from artificial intelligence in 2024. Read along as we explore these questions in more detail.

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Market Outlook Fall 2023

As we turn the calendar to the closing months of 2023, we look back and consider how the year has unfolded compared to expectations at the beginning of the year. A year ago, the consensus opinion was that economic conditions would be poor in the first half of the year, likely including a recession, and the economy would recover in the second part of the year. Most investors expected a weak first half for stocks, with a rebound later in 2023. Contrary to the consensus belief, the economy proved far more resilient than expected through September, driving equity returns far above expectations in the first half of 2023 as investors’ calls for a 2023 recession went silent by mid-summer.

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Market Outlook Summer 2023

The phrase “if it is not one thing, it is another” implies that when dealing with financial markets and the economy, there is often a continuous cycle of challenges or issues. It suggests that as one problem is addressed, another one arises. This statement reflects the dynamic and ever-changing nature of financial markets and the economy.

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Market Outlook Spring 2023

This never gets easier. In the writing of our Quarterly Outlook, barely a day goes by without a twist or turn with the economy, asset classes, sectors, or portfolio holdings. There is no ‘skipping school’ in our world, but we understand this challenge, as this is our chosen profession. As ‘Spring Break’ has been happening the past few weeks, around here, it is ‘nose to the grindstone’ and prepare for every twist and turn.

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Market Outlook Winter 2023

At the start of every calendar year, we see the major financial institutions providing their ‘outlook’ for the markets. Usually, the outlooks are hedged by not being too divergent from consensus, but nonetheless, they all must predict something, knowing that if their thesis comes true, they can lay claim to have made the right call.

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