2024 Mid-Year Market Update

This week, I attended the SABRE Market Summit on coastal real estate economic trends, and I want to share some of the key takeaways from the event.

The most interesting presentation was called US Economy and Monetary Policy given by Nicholas Lacy, the Chief Portfolio Strategist for Raymond James Asset Management Services.

My key takeaways from his presentation and the conference are: 

#1 - Expect an economic slowdown. 

Some key indicators of this are: 

  • The labor market is weaker
  • Consumer spending is softening
  • The Job market is weakening
  • Inflation is now at 2.5% and is likely to hover around 3% for the next few years (was at 1.5% pre-COVID)
  • US debt service costs are very high (~10%)

#2 - There is most likely NOT an impending recession.

If anything, we will probably have a “soft landing.” 

#3 - 2 (maybe 3) Fed Cuts on the horizon this year. 

Has the Fed been saying this all year?

Yes…..But they haven’t changed their tune. So, hopefully, we will see 2-3 Fed cuts in Q3 & 4 this year.

#4 - It’s a good time to invest in bonds. 

Now may be the perfect time to invest in bonds. Yields are at levels you could only dream of 15 years ago, so you'd be locking in substantial, regular income. In the future, if yields go down, prices will likely go up, and your returns will just go up. 

Nicholas Lacy even said, “I’m 95% confident that you can get an 11% return” if you buy bonds now. 

So, if you have some extra cash lying around that you can invest for 5-10 years, buying some bonds might be a good idea. 

#5 - It’s a good time to buy stock in small-cap companies

Small-cap stocks are company shares with market values between $250 million and $2 billion.

These companies are currently trading at a 30-40% discount, so it’s a good time to buy. 

#6 - Insurance premiums are NOT predicted to come down anytime soon. 

Sadly, insurance premiums are predicted to stay relatively high. 

Home insurance rates rose almost 20% between 2021 and 2023 alone. Still, the price increases aren’t showing signs of letting up. The online insurance marketplace analysis predicts a 6% jump in premiums this year. Worsening weather conditions brought by climate change, among other factors, can increase the rates next year.

So, no good news on the insurance front, but here is some interesting data about average home insurance costs this year. 

Overall, the market outlook is not great, but as I've mentioned in past blog posts, there are opportunities in EVERY part of the market cycle. 

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