Bulls, Bears And Bets: Dissecting 2024 Forecasts From Financial Giants

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In the midst of a buoyant November, where positive economic indicators hint at a celebratory close to a hawkish inflation cycle and robust Black Friday spending, a sobering contrast emerges in JPMorgan’s recently unveiled Investment Outlook 2024 report, titled ‘Too early for a victory lap’, released on November 29th.

 

JPMorgan prophesies gloom this time next year 

Disregarding the prevailing optimism, JPMorgan foresees a looming shadow of uncertainty in the upcoming year. The report, initiated with observations about market sentiments leaning towards a soft landing due to steady activity and declining inflation, asserts a more cautious stance. It predicts a potential decline in the S&P 500 index by nearly 8% in the next year, envisaging its valuation of around 4,500 by the end of 2024.

 

A different opinion… and also Taylor Swift

However, this stark prediction diverges sharply from Goldman Sachs’ contrasting viewpoint, as outlined in their ‘All you had to do was stay’ report, published on November 21st. Goldman Sachs forecasts a bullish scenario, envisioning the S&P 500 to reach around 4,700 by the close of 2024, marking a 5% increase over the year.

Their rationale hinges on the belief that a steady U.S. economic expansion, coupled with an absence of recession, could lead to a 5% surge in earnings and an equity market valuation of around 18x, akin to the current P/E level.

The forecast bullishly stated that:

At this time next year, portfolio managers will look back and realise the best strategy for 2024 was to follow Taylor Swift’s advice in the song from her 1989 album: ‘All You Had To Do Was Stay’ – invested.

 

A third view

In a more balanced perspective, Wells Fargo, in their report released on November 27th, strikes a middle ground between JPMorgan’s caution and Goldman Sachs’ optimism. Terming 2024 as a potential “soft patch”, Wells Fargo acknowledges the U.S. economy’s deceleration while maintaining a more defensive stance.

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Their outlook emphasizes quality investments, stating an S&P 500 index range of 4600-4800, with an earnings target of $220. This projection exceeds JPMorgan’s pessimistic forecast yet offers a broader range surpassing even Goldman Sachs’ 4700 estimate.

The report said that:

 

The U.S. economy continues to lose steam. Overseas, the global economy has also been slowing… our positioning focuses on quality and playing defence… We maintain our 2024 S&P 500 Index price and earnings targets of 4600-4800 and $220 respectively, and we lowered all other equity classes.

 

Who to believe? 

The varying outlooks paint a diverse landscape, hinting at both cautious optimism and prudent preparedness amid the uncertain trajectories foreseen by these prominent financial institutions. As we head into the upcoming year, the contrasting views provide an intricate tapestry of possibilities, urging a blend of watchful anticipation and strategic adaptability in the face of potential economic shifts.


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