Market and Technological Trends in 2024
Inflation is easing and asset managers are navigating a mix of volatile markets, elevated interest rates and the possibility of economic recession. An integrated approach to asset management with the focus on risk management and investment opportunities remains relevant in 2024.
While generative artificial intelligence (AI) continues to present new opportunities and AI takes bigger decision-making role in more industries, there are increasing concerns related to ethical use of artificial intelligence. Some of these concerns include privacy safeguards and how to overcome bias in algorithmic decision-making. Many believe that the use of artificial intelligence should be tightly regulated.
Although there is a lot of talk about quantum computing, scientists believe that practical quantum computing is still a few years away. Margaret Martonosi, a computer scientist says: “You will not have a quantum laptop. Think about it being something like an accelerator in the cloud for particular applications, whether they’re optimization applications, financial analysis, understanding molecular dynamics or chemistry, agriculture, pharmaceuticals. In those kinds of things, it is potentially game-changing.” *
With the rapid progression of quantum computing and associated cybersecurity risks, many observers of this technology expect to see an increase in activity around quantum-safe cryptography (also referred to as post-quantum cryptography (PQC).
The public is becoming increasingly aware of sustainable technologies as countries and corporations continue to work on meeting net-zero commitments. Financial advisors face the challenge of aligning investment solutions with the evolving values of their clients who seek investments that yield returns and contribute positively to societies and the planet.
Over the past month, several Fed officials, including Chair Jerome Powell, stated that the central bank needs greater confidence in the disinflation trend before starting to cut interest rates. Falling interest rates typically push the price of bonds up. Price and yield (the return on the capital you invested in a bond) are inversely related. When a bond price goes up, the bond yield goes down. As demand drops for the bonds with lower yields, the value of those bonds will likely drop too. Another important factor to consider is duration. Typically, the further away a bond is from its maturity date, the longer its duration - the more sensitive your bond investment will be to changes in interest rates.
There are many factors that impact stock market returns, and one of these factors is the US presidential election. There have been 23 elections since the S&P 500 Index began. In these election years 19 of the 23 years (83%) provided positive performance (2020 presidential year is not included).**
Investors can benefit from professional guidance that offers balanced perspectives and dynamic solutions.
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* Princeton University/Computer Scientists Have a Key Role in Shaping Quantum Systems, January 5, 2023; Equad News, Vol. 34, Issue 1, Fall 2022, Princeton University, School of Engineering and Applied Science.
** First Trust Portfolio, LP, S&P Returns in US Presidential Years, 2016