Investment Insights — Elaborate Contraptions

In the latest Investment Insights commentary, Matt Forester shares his views on how the global economy and capital markets often act like complex contraptions whose intricacies may have varied effects at different times.

Consider these five trends as we start 2024. Download the whole commentary below to gain deeper insights.

Five Trends to Consider

1. Continued Geopolitical Complications
   Geopolitical risks appear unusually high, so we may be likely to see enduring anxieties spill over into global consumer and investor activity.

 

2. Contradictory Consumer Outlooks
   Generation X (born 1965–1980) and Generation Y (born 1981–1996, aka Millennials) generally have an especially gloomy economic outlook. Americans generally seem to disbelieve, or are unaware of, some of the very positive data points on the U.S. economy.

 

3. Pulleys, Levers and Thingamajigs
   The Federal Reserve policy tools act in various ways, often to raise or lower market interest rates, or to raise or lower market liquidity. And like any complex contraption, they can work in strange and mysterious and sometimes contradictory ways.

 

4. Complex Liquidity Effects of Monetary Policy
   We may see liquidity dry up in the first quarter of 2024 with the wind down of the Federal Reserve's overnight reverse repurchase program facility unless other rate or policy changes alter the “game.”

 

5. Benevolent Outcomes of Elaborate Contraptions
   Ultimately, 2023 turned out generally better than most analysts had expected. So, let's count our blessings and enjoy the benevolent outcomes of the whirligigs, thingamajigs and the whimsically elaborate contraptions that operate all around us in the myriad of federal systems working to bolster macroeconomic outcomes.