Last year, risk assets in the stock market (stocks and cryptocurrencies) achieved a double-digit percentage of bullish performance, and even a triple-digit percentage in the cryptocurrency market. Let’s take stock of the consensus of analysts and economists for 2024.
S&P 500 up 11% considered in 2024
Despite the still-open debate about the likelihood of a US recession, earnings expectations for 2024 remain very bullish with an expected 11.7% annual growth and 5.5% turnover. The Fed’s key point, disinflation and a macroeconomic soft landing are the backdrop to such favorable expectations. Let’s summarize the latest expectations for the earnings of American companies this year.
This famous consensus of financial analysts and economists is most often wrong when compared to the actual facts found at the end of the year. Despite everything, it is he and his regular updates that drive the trend of the so-called “risky” assets in the financial markets, that is, the stock market and the cryptocurrency market in the final stage of risk.
Despite uncertainty about a U.S. economic recession this year, analysts expect the S&P 500 to post double-digit earnings growth in 2024. The estimated growth rate (annual rate) for 2024 is 11.7%, which is higher than the average earnings growth rate for the last 10 years of 8.4% (2013 – 2022).
Histogram setting out earnings and revenue expectations for S&P 500 companies for 2024
All eleven “super” sectors in the S&P 500 are expected to post year-over-year earnings growth in 2024. Five of these sectors are expected to see double-digit growth, led by healthcare, communication services and information technology, the latter two having a strong positive correlation with the price of Bitcoin.
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Finally, potential profits are expected to reach new all-time highs in 2024! Disinflation, a quick FED turnaround and a soft landing are the cornerstones, especially with resilience in household consumption (70% of US GDP).
In 2024, growth in the United States is expected to slow to 1.2% (but remain positive), in the UK to 0.4%, while growth in the Eurozone is expected to accelerate to 0.7%.
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US inflation could return to 2% as early as March 2024
Much of the expectation of double-digit earnings growth in 2024 is based on a scenario of a quick turnaround from the FED and ECB with significant rate cuts (between 4 and 6 over the period). ‘year). In short, how many rate cuts and at what speed?
Remember that the cornerstone of such a monetary scenario is the confirmation of the inflation rate (nominal inflation + core inflation) returning to 2%.. The FED pays special attention to the PCE price index, whose last value fell to 2.6% in the nominal version and 3.2% in the basic version. The trajectory therefore remains bearish and close to the central bank’s target.
This Thursday, January 11th consumer price index CPI is updated for the month of December and core inflation should fall to 3.93%. Will US inflation be at 2% in March for the Fed to turn around? (this is one of the keys to the growth of profits and turnover of companies in 2024).
Inflation in the United States by CPI
Indeed, Truflation (based on blockchain technology) suggests that annual inflation is back in touch with 2%, essentially due to a favorable base effect. Inflation Nowcasting from the Cleveland Fed sees PCE falling to 2.30% in January. So there is reason to be optimistic about the fundamentals of traditional finance at the start of the year.
Inflation in the United States by PCE and CPI
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Vincent Ganne is a market strategist, technical analyst, stock market trainer and speaker on BFM Business. Thanks to extensive experience in the field of analysis, it offers global access to financial markets. Both from a macroeconomic and microeconomic point of view. Vincent Ganne also uses many aspects of graphical analysis to predict trends in financial assets in the medium and long term.
Vincent Gann
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