Outlook 2024 offers the Janney Investment Strategy Group’s baseline forecasts for the economy and equity and fixed income markets in the coming year.

Phase Transition

Phase transition describes a change in the state of an object, such as water going from stasis to boiling once the temperature reaches 212 degrees F, or conversely, freezes at 32 degrees F. Outlook 2024 is about an economic phase transition. After a year of posting positive and surprisingly strong growth, the question is whether, metaphorically speaking, inflation’s falling temperature and the Federal Reserve’s rising temperature will change its state. Could the economy continue to expand, averting a recession, and perhaps even overheat should inflation reignite? Or will the economy slow and even contract as the yoke of high borrowing costs and shrinking savings bears too much weight for the consumer and businesses to carry?

There is even a theory developing that productivity, often quoted but difficult to see and measure, may be the elixir to rescue the economy from a growth-sapping policy of maintaining a tight monetary setting until inflation is ameliorated. That is, even if it comes at the cost of job losses and an accompanying recession. The latest report on that front did hint at such an outcome, giving hope that an upshift in the output/worker will help cure inflation without the need for further heavy-handed monetary intervention. It may be too soon to tell, but the means by which it could happen, via the application and ubiquitous adoption of artificial intelligence, robotics, and various other forms of automation, are among those things that could be the catalyst.

Outlook 2024 establishes a central case with the acknowledgment that new data will be parsed in the coming months that might provide even better clarity as to which phase transition outcome is increasingly likely. In the meantime, also presented are the investment implications to peruse and consider in the context of an investor’s bespoke goals and objectives.

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This presentation has been prepared by Janney Investment Strategy Group (ISG) and is to be used for informational purposes only. In no event should it be construed as a solicitation or offer to purchase or sell a security. The information presented herein is taken from sources believed to be reliable, but is not guaranteed by Janney as to accuracy or completeness. Any issue named or rates mentioned are used for illustrative purposes only and may not represent the specific features or securities available at a given time. Preliminary Official Statements, Final Official Statements, or Prospectuses for any new issues mentioned herein are available upon request. The value of and income from investments may vary because of changes in interest rates, foreign exchange rates, securities prices, and market indices, as well as operational or financial conditions of issuers or other factors. Past performance is not necessarily a guide to future performance. Estimates of future performance are based on assumptions that may not be realized. We have no obligation to tell you when opinions or information contained in Janney ISG presentations or publications change.



Definition of Ratings


Overweight: Janney ISG expects the target asset class or sector to outperform the comparable benchmark (below) in its asset class in terms of total return.


Marketweight: Janney ISG expects the target asset class or sector to perform in line with the comparable benchmark (below) in its asset class in terms of total return.


Underweight: Janney ISG expects the target asset class or sector to underperform the comparable benchmark (below) in its asset class in terms of total return.





Asset Classes: Janney ISG ratings for domestic fixed income asset classes including Treasuries, Agencies, Mortgages, Investment Grade Credit, High Yield Credit, and Municipals employ the “Barclays U.S. Aggregate Bond Market Index” as a benchmark.


Treasuries: Janney ISG ratings employ the “Barclays U.S. Treasury Index” as a benchmark.


Agencies: Janney ISG ratings employ the “Barclays U.S. Agency Index” as a benchmark.


Mortgages: Janney ISG ratings employ the “Barclays U.S. MBS Index” as a benchmark.


Investment Grade Credit: Janney ISG ratings employ the “Barclays U.S. Credit Index” as a benchmark.


High Yield Credit: Janney ISG ratings employ the “Barclays U.S. Corporate High Yield Index” as a benchmark.


Municipals: Janney ISG ratings employ the “Barclays Municipal Bond Index” as a benchmark.



Analyst Certification


We, Mark Luschini and Guy LeBas, the Primarily Responsible Analysts for this report, hereby certify that all views expressed in this report accurately reflect our personal views about any and all of the subject sectors, industries, securities, and issuers. No part of our compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this research report.

About the authors

Mark Luschini

Chief Investment Strategist, President and Chief Investment Officer, Janney Capital Management

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Guy LeBas

Director, Custom Fixed Income Solutions

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