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For the markets, the ideal economic scenario for 2024 would be a fairly soft landing of the US economy and gradual recovery in Europe. Is this a realistic scenario?

While stagnation in the European economy is concerning, the sharp decline in inflation is providing reassurance. With the ECB’s more conciliatory approach, the potential for economic recovery in 2024 and their attractive valuation, European equities have earned their place in portfolios.

The “higher-for-longer” interest rate scenario announced by the central banks is largely reflected both in prices and in investors’ thinking. So, what scenarios could result from this? Either the current economic slowdown will be sufficient to take inflation off the table for a long period, or the balance of resilience/disinflation will persist. Whichever scenario plays out, when investors are less afraid of central banks, the “common global cycle” gives way to very different local situations in North America, Europe and Asia.