The Market Outlook Symposium: A Look Back at the Look Forward

“We’ve got major market indicators touching on all-time highs,” VettaFi Vice Chair Tom Lydon said in the opening remarks. He continued to describe the “Goldilocks” scenario that was 2023, as the Fed seemingly navigated creating a high-rate environment without demolishing the economy.

VettaFi’s Head of Research set the stage with an early poll showing market bullishness among attendees and discussing VettaFi’s upcoming conference, Exchange.

VettaFi Vice Chair Bob Huebscher interviewed Jeremy Siegel at the top of the symposium. Accordingly, Siegel shared his broad market outlook.

Looking at last year’s predictions, Siegel was on point with his predictions about the market. At the close of 2022, amid the bearishness, Siegel’s contrarian view won the day in 2023. He also correctly called inflation finally subsiding.

When asked about the fair value of the S&P 500, Siegel said, “Just last night, as we know, the Dow just surged to an all-time high. The S&P is going to follow very soon.” Sharing his 2024 view, he said, “I am bullish.”

Siegel sees value stocks and smaller stocks taking the baton in 2024, reversing 2023’s trend of large stocks leading the way. He predicted a 10-15% increase next year. Looking at rate cuts, Siegel said, “I think we may have five or six rate cuts.”

Pivoting to fixed income, Invesco’s Jason Bloom and PIMCO’s David Braun discussed the general state of fixed income opportunities and challenges. “Lots of fireworks, lots of volatility. It is a good time for active managers,” Braun said.

Investment-grade corporates are where attendees saw the most opportunity, followed by high-yield corporates. Weighing the two options, Bloom said, “It really depends on what is your base case for the Fed’s rate cuts next year?”

Alternatives have been top of mind since 2022 put an exclamation point on their value in down years. Bitwise’s Matt Hougan and Calamos’s Matt Kaufman chimed in.

“Crypto winters pass and crypto is anti-fragile,” Hougan said, seeing a bright future for crypto. “We think we’re extremely well set up for 2024.” Hougan noted that Bitcoin’s price is determined by supply and demand. A potential spot product will definitely spur demand.

Talking about convertible bonds, Kaufman said, “The short version of this is that alternatives broadly allow for the opportunity of improved risk-return profile.”

Jason Bloom and F/m Investments’ Alex Morris talked about taking on credit or duration risk. Both said they felt comfortable taking on more credit in the current environment.

Speaking to Fed chair Powell’s recent remarks, Morris noted, “I think we saw a very proactive Fed.” Treasuries are top of mind for many investors. “Yields are fun to talk about, but you have to wait until the end of the bond to see that yield,” said Morris.

Fixed income investors have some tailwinds going into 2024. “Rates are coming back down and the risk appetite is increasing,” Bloom said.

The penultimate session was on equities and featured BNY’s Alex Torrens and Astoria Advisors CEO and founder John Davi. Looking broadly at emerging themes, Torrens noted that AI has been a big boost and part of the magnificent seven story in 2023.

“There’s one portfolio you should own when the Fed is raising rates and a different one you should own when the Fed is cutting rates,” Davi said. “We are of the opinion you should tilt away from defensive equity,” he added. Cyclical growth could be a good option for investors as the Fed looks to cut rates.

Making the case for international investing, Torrens said, “It is always a good thing to have at least some international allocation.” He noted that plenty of good companies list outside of the U.S., and there’s no reason not to invest in these firms. Talking about his firm’s view, he said, “We’re trying to find the best businesses we can, pay good prices for them, and then hold on to them for a long time.”

Head of U.S. Fixed Income for abrdn Jonathan Mondillo and Goldman Sach’s Alexa Gordon lead the final panel on municipal bonds.

In today’s unusual environment, many investors are seeing munis as attractive relative to treasuries. “What we’ve seen is they’ve really outperformed,” Gordon said, noting that munis have some tailwinds as well. “There’s a real potential for munis to get even more attractive as we head into 2024.” Mondillo added that some of the tailwinds for munis are going to be headwinds for treasuries.

When asked to drill into some of the things that happened in 2023, Munillo said, “To start the year we didn’t get the rebound we expected.” Despite the slow start, munis turned around recently.

Noting that flows have been muted in mutual funds, Gordon observed, “The muni market is evolving. You might see different wrappers.”

The Market Outlook Symposium was crammed with useful information. Some of the experts present as well as thought leaders from around the industry will be gathering in Miami Beach February 11th-14th for Exchange. Advisors who want to dig deeper and earn free CE credits in 2024 while growing their practice can register here.

Register for Exchange 2024 here.

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