Economists are trying to imagine scenarios in a world that keeps defying expectations .
COVER STORY
The Year Of Living Dangerously
A
NTICIPATION FOR A PIVOT by the Federal Reserve and a turn away from interest rate hikes sent U . S . bonds and equities surging from early November through mid-January . However , by then investors were largely concerned about new things , including geopolitical problems , which topped their list of concerns heading into 2024 . Over the last two years , conflict has spread from Russia and Ukraine down through Israel and Gaza into the Red Sea and the Gulf of Aden . In mid-January , violence reached the Indian Ocean after Iran bombed three nations , including Pakistan , in 24 hours . Pakistan promptly bombed Iran back .
Watching conflict spread from Eastern Europe to the Middle East and even to South Asia has clearly left many people queasy . It ’ s also threatening to rekindle inflation . At a London conference of global investors sponsored by Goldman Sachs in mid-January , 54 % of participants named geopolitical worries as their biggest concern , while 17 % cited the U . S . presidential election , according to Bloomberg . Indeed , the prospect of a regional conflict going global remains a wild card that can ’ t be discounted . It ’ s prompted some to quip that markets have been partying like it ’ s 1939 .
Over the last two years , the U . S . economy has wrestled successfully with inflation and defied a
Economists are trying to imagine scenarios in a world that keeps defying expectations .
By Evan Simonoff
continual stream of recession forecasts , though few people seem satisfied with the post-Covid-19 recovery . There is also a feeling that the current economic strength can ’ t be sustained when the federal government is racking up massive budget deficits approaching $ 2 trillion . That was once considered unheard of during a peacetime expansion .
People almost everywhere will get to speak their minds on topics like these this year . An estimated 49 % of the world ’ s population in 64 countries will be eligible to vote in 2024 , so the world ’ s political leadership could look very different in 12 months .
The rest of the world ’ s problems aside , the sun rarely sets on the U . S . stock market . American investors entered 2024 conditioned by 15 years of stunning returns , beginning with an S & P 500 that started at 666 in March 2009 . Equities , goosed forward by easy monetary policy , saw a spectacular run-up , and that propelled the United States out of pandemic economic doldrums faster than other nations . The market ’ s lift also spawned an increase in wealth among the clients of financial advisors .
PHOTOGRAPHY VIA GETTY IMAGES JANUARY / FEBRUARY 2024 | FINANCIAL ADVISOR MAGAZINE | 37