However, what is evident is that the typical overvaluation (relative to earnings) seen in almost every American stock is steadily eroded in both mid- and small-cap stocks. This ongoing rationalization will inevitably creep into more and more stocks in the « Large Cap » space. The bank’s strategists contend that the U.S. economy could see a growth slowdown in the first half of 2024 but wouldn’t fall into a recession (at least in the technical sense).

The ongoing crush on spending upon the more-populous younger generations has not been commented upon in depth.

Index Levels and Factors to Consider in 2024

On the 13th of December, the Federal Reserve announced that interest rates will be left steady (as expected) with a forward-looking projection indicating that the policy rate will be lower by the end of 2024. While Year-on-Year (YoY) Consumer Price Index (CPI) has been nowhere close to the Federal Reserve’s target of 2%, the central bank seems disinclined to be more aggressive in mopping up excess money supply at the risks of upending markets even further in a year that is likely to be highly contentious (politically). If November’s trajectory (which largely incorporated the status quo) is any indication, it is likely that the S&P 500 will close the year at 4,800-4,830 range, i.e. 25-26% higher than EOY 2022.

The high growth seen in this year, however, and the increasing lack of breadth in corporate performance is a cause for pause with substantial empirical rationale. Since the GFC, no year like the present has been followed by a similar year of high performance.