Market Perspectives Q2 2024

With an ever-evolving macroeconomic environment, we wanted to share some key insights on our investment outlook. These insights are provided by Mission Wealth’s Chief Investment Officer Kieran Osborne and the investment team.

Market Update

Stocks have been supported by several factors, not the least of which the reduced likelihood of a near-term recession. With that said, stickier inflation and the resulting repricing of Fed rate cut expectations, along with geopolitical concerns, have driven a recent increase in volatility. Earnings have largely been positive, and analysts continue to increase future earnings expectations. The largest stocks have driven recent S&P 500 performance, and we are cautious around current concentration. Bonds yields are much more attractive today relative to recent years.

Economic Overview

Economic growth forecasts have been revised higher, indicating a reduced chance of a recession. U.S. economic growth is expected to exceed the long-term trend rate in 2024. The labor market is still strong, consumer spending continues to be robust, business fundamentals are broadly healthy and CEO confidence has increased. On the other hand, leading economic indicators point to moderating growth, and we may experience some rebalancing of the labor market moving forward. Inflation is anticipated to remain sticky and above the Fed’s target of 2% through at least 2026. With this backdrop, the Fed has indicated it will take a wait-and-see approach and is likely to take longer to cut rates than previously thought. As a result, we anticipate a higher-for-longer interest rate environment.

Positive, but Moderated, Outlook for Stocks; Bond Yields Attractive 

Stocks may be supported should the Fed eventually cut rates and if the economy avoids a near-term recession. Given the structural shift in monetary policy, we expect future annualized returns for stocks in the mid-to high-single digit range over the long-term. Bond yields are more attractive today, with many of our preferred bond funds yielding mid-to high-single digits.

We believe alternative strategies offer attractive risk-adjusted return potential in the years ahead. These alternatives are designed to yield attractive risk-adjusted returns with minimal correlation to the public markets, making them an essential component of a well-rounded investment approach. Such strategies are particularly crucial as we anticipate a moderation in long-term stock market returns.

Commitment to Long-Term Fundamentals

Our core philosophy focuses on the long-term fundamentals of investing. We believe that our diversified and carefully rebalanced portfolios are well-equipped to meet the financial goals of our clients, regardless of short-term market shifts.

At Mission Wealth, we are committed to guiding our clients through complex market environments with strategic planning and a forward-thinking mindset. By staying informed and adaptable, investors can feel confident in their financial future.