CIO Strategy BulletinArticle08 Jun 2024

Mid-Year Myopia: Zoom Out for The Big Picture

CIO Strategy Bulletin

The global economy’s normalization and growth are cause for some relief, after the extreme distortions that went before. However, we recognize that neither the economy nor markets present “ideal” conditions. At the same time, we see many possibilities as we navigate this environment and seek to preserve and grow wealth. Resilient portfolios are our response.

Key Takeaways

  • In our Wealth Outlook 2024 Mid-Year Edition, we made several predictions coming into the year: 1) Global growth is improving, 2) US employment growth will slow, 3) Another reversal in policy from the Fed is coming, and 4) Corporate profit growth and breadth is improving across the world.
  • While equities have rallied to reflect these same views, investor confidence is actually “thin” and subject to swift changes in sentiment. Absent a contraction in profits, inter-year swoons in equities present a potential opportunity.
  • Headline US employment data for May bucked a seasonal trend of disappointing spring readings. This has set back bond investor expectations for a Fed pivot once again. Nonetheless, a moderation in the US labor market is clear when you “zoom out.” The 2.8 million US jobs added at US employers over the last year is the weakest gain of the cycle thus far. Unfilled job openings have declined from 12 million to 8 million. The separate “Household Survey” shows an unusually marked contrast with the survey of employers. The US unemployment rate has risen from a low of 3.4% to 4.0%.

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