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Q1 2024 Review: Market & Economic Commentary

Check out our Q1 2024 Review: Market & Economic Commentary with Chief Investment Officer Matthew Harbert, CFA from Instrumental Wealth.

Play the video recording, or see the takeaways for each section below organized by section & topic. Each topic has screenshots from the presentation.

Table of Contents:

Investment Markets (0:26)

All graphs and charts are for illustrative purposes only.

In this section, Matthew discusses the state of the Investment Markets in Q1 of 2024, reviewing global stock categories, U.S. large & small cap equities, and bond markets.

  1. Global stock categories generally performed positively in the first quarter, with US large cap equities leading.
  2. US large-cap equities have continued their year-long trend of outperforming US small-caps, international developed markets, and emerging markets.
  3. The dominance in US large cap equities is mainly driven by seven major companies, though recent trends suggest a potential broadening of gains across more companies.
  4. The performance gap between the top seven companies and the other 493 in the S&P 500 has been narrowing.
  5. US growth equities have outperformed all other sub-asset classes in both the recent quarter and over the past twelve months.
  6. Commodities showed positive returns this quarter, but they, along with bonds, are the few asset classes still posting negative returns over the past year.
  7. Bond market struggles continued as yields, which had been declining for decades, began to rise sharply over the last three years, affecting returns.

U.S. Economy (3:26)

All graphs and charts are for illustrative purposes only.


In this section, Matthew discusses the state of the U.S. Economy in Q1 of 2024, reviewing Fed tightening cycles, inflation rates, and the U.S. labor market.

  1. The Fed completed an unprecedented tightening cycle last year, raising interest rates by 525 basis points in 17 months to combat inflation.
  2. Despite this aggressive rate hike, inflation has only partially retreated from its peak of 9% in June 2022 and remains above the Fed's 2% target.
  3. The inflation rate has stabilized in the range of 3 to 3.5% following the completion of the Fed's rate hikes.
  4. Key inflation components like energy and shelter costs have been volatile, with energy prices rebounding and shelter inflation remaining stubbornly high.
  5. Both headline and core inflation rates are significantly above the Fed’s target, with recent figures indicating an annualized rate around 4.4% for headline and 4.8% for core inflation.
  6. Consumer spending has remained robust, supported by credit card usage and declining savings rates, which could continue as long as employment remains stable.
  7. The labor market shows signs of normalization but remains tight, with job openings still significantly above historical averages.
  8. Job creation has been strong, with more than 200,000 jobs added monthly and a slight increase in the unemployment rate to 3.8%, still below the long-term average.
  9. Despite strong labor and consumption indicators, GDP growth slowed to 1.6% in the first quarter, raising questions about the potential for a recession.
  10. Recession indicators are mixed, with some predicting imminent recession due to an inverted yield curve, while others show improving conditions, suggesting varied economic outlooks.

Key Takeaways (10:24)

All graphs and charts are for illustrative purposes only.


In this section, Matthew shares his overall takeaways for inflation, Fed Policy, U.S. Recession, and the Markets in Q1 of 2024. 


  • We expect price pressures to continue as long as consumer spending remains robust.
    • Credit cards and savings are being heavily used to fund spending needs.
    • The catalyst for pullbacks in spending will be a weakening of the labor market.
    • The labor market trend may take some time to get to normal.
  • We may be entering a period where the normal rate of inflation is closer to 3% or 3.5% than the 2% we have been used to since the financial crisis.


Fed Policy:

  • We should expect fewer rate cuts than has been projected, 1 maybe 2 this year (if any).
  • We should also expect any cuts to start later, we think it will be closer to the end of the year or even 2025.
  • In other words, we expect the scenario that rates will remain higher for longer.


U.S. Recession:

  • Signals are mixed
    • Inverted yield curve indicated recession is coming
    • LEI no longer predicting a recession
    • Consumers and Employment remain strong
  • A recession in 2024 is a probability but we feel a higher probability of occurring in 2025.



  • We still prefer US equities relative to International equities
    • Particularly US large cap equities
  • Fixed Income
    • While bonds have been challenged with rising rates, they are paying high enough yields that give us the ability to be patient.
    • Rate cuts by the Fed will be a big tailwind to bond returns.
  • We don’t think this is the time for big bets.
    • With so many uncertainties, staying diversified across several markets should help mitigate the risks.


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