Interest rates, you won't be missed😎

Good afternoon! Today we will be covering Interest Rates, the S&P, The 2023 Mavericks and the rebound in M&A activity.

Reading time: 4 Min

INTEREST RATES
2024 Interest Rates

In 2023, the U.S. Federal Reserve's shift towards a more hawkish 2024 voting panel won't deter the projected pivot to interest-rate cuts. Recent data, including the personal consumption expenditures price index, hints at a potential for more rate reductions, with both headline and core measures cooling more than expected.

The second half of 2023 witnessed a dovish turn at the Fed due to easing price pressures and a cooling labor market. Analysts foresee a robust 2024, anticipating a rebound in company acquisitions.

Fed Chair Jerome Powell's indication of rate cuts reflects a proactive stance to counter potential disinflationary dynamics. Expectations for three quarter-point rate cuts align with evolving data trends.

INVESTING
The S&P went out with a bang.💥

The S&P 500 finished it’s last trading day with a 24% YTD return, surpassing any expectations that analysts had laid out. The 2022 consensus for 2023 was a final S&P value of 4009, but as we now know the analysts were dead wrong, as the S&P currently stands at 4,769.

The median year-end 2024 forecast for the S&P 500 is 5,068. If there is anything to learn from 2023, it’s that no one know what the market will do and we have to take these 2024 forecasts with a grain of salt.

GROWTH
Market Mavericks 2023🦅

In 2023, the 'Magnificent 7' tech giants, including Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms, and Tesla, soared over 100%.

Notable mid-cap winners included Duolingo (up 220%), Abercrombie & Fitch (274% higher), and ImmunoGen (closed 522% higher after AbbVie's $10 billion acquisition).

Among the losers, Enphase Energy dropped 48%, Moderna and Pfizer fell by 44%, and Dollar General saw its first annual decline since 1968, plummeting 45%. The year's surprises highlight ongoing market volatility. Investors brace for another year of twists and turns in 2024.

M&A
M&A Volumes Fell 17% in 2023, The Lowest in a Decade.📉

In 2023, global M&A activity fell 17% to ~$2.87T, hitting its lowest since 2013 due to high interest rates and market uncertainty. Despite this, Q4 saw a 19% spike, led by major energy deals like ExxonMobil's $59.5B acquisition of Pioneer Natural Resources.

M&A advisors anticipate a more robust 2024, signaling a potential rebound. The slowdown impacted financial giants like Goldman Sachs and JPMorgan, heavily reliant on M&A fees. Moelis & Co.'s Ken Moelis notes a substantial backlog, expecting a surge in company acquisitions in 2024.

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