We invite you to watch our latest video, “Agili Market Insights: Spring 2024.” A full transcript of the video, featuring Michael Joyce, is below in italics.




Hi. This is Michael Joyce with Agili, your Personal CFO and I’m pleased to share with you our thoughts and viewpoints for the spring of 2024.

Today I’m going to talk about a couple topics. I’m going to talk about whether stock valuations have come too far too fast. I’ll talk about some reasons that we’re very optimistic about the long term and I’ll balance that out by talking about a growing concern that we have with the growing national debt. But first a recap.


Recent Market Performance

The First Quarter of 2024

The first quarter of 2024 produced some very strong returns for the markets. The stock market last year was led by a group of stocks called the “Magnificent Seven.” They have now consolidated into the “Fabulous Four” for this year, which contributed to about half of the returns of the S&P 500 index for the quarter ended March 31st.

International markets also did pretty well, but the bond market was down. As interest rates go up bond prices come down and interest rates are up about four or five tenths of a percent on longer term bonds since the beginning of the of the quarter.

Understanding Valuation

Price-Earnings Ratio

If we look at stock market valuations on the face of it, it might look a little bit rich so what I’m going to do today is deconstruct probably the biggest valuation measure that investors use, the price-earnings ratio. That’s really governed by a couple things. Number one, it’s going to be governed by the E part — earnings and earnings growth. It also is really governed by interest rates. Interest rates impact the valuation level of the price-earnings ratio.

So let me go back to the earnings part. One of the reasons that the markets are up is because investors feel that we may have dodged a bullet with a recession. Most people were thinking a year ago that we would have a recession but now I think most pundits are talking about a so-called soft landing, whatever that is. For a large part they are correct that earnings growth has been very good and one of the reasons it’s been very good is because of productivity growth. In the fourth quarter of 2023 productivity growth was up 3.2% which is very strong.

Productivity Growth

Now, what is productivity growth? That is when you get more output for the same amount of inputs or maybe even fewer inputs. So, if you think about that in terms of labor costs that means that you’re using the same amount of labor to produce more stuff or to provide more services. That’s simply what productivity growth is and it’s really grown quite a lot since the pandemic. If you want to look at it one way it’s kind of a silver lining of the pandemic, but there are also some other factors.

We have really the growth of a nascent industry in artificial intelligence. Now artificial intelligence has probably been around for a while but it’s really grown in the public mind over the past couple years. It has helped productivity and will continue to help productivity. We do view that artificial intelligence could really be transformational for the economy and for the world’s economy. It’s just not going to happen all at one time; it’s going to be more incremental.

What to Watch for in 2024 and Beyond

Interest Rates

In terms of the level that’s governed by interest rates, a lot of investors are really hanging their hat that the Federal Reserve is going to cut rates several times in the near future. There’s no doubt that the Fed has very likely stopped raising rates but many investors have been maybe a little bit too optimistic about how quickly they’re going to lower rates. Now we do agree that short-term rates are going to come down quite a lot but I’d also argue that price earnings ratios should be more based on long-term rates because most investments in stocks are for the long term and we don’t believe that long-term rates are going to come down quite as much as short-term rates as inflation has declined.


As I mentioned we’re very optimistic about the future. I talked about some of the increases in productivity growth and the fact is we’re just an innovative society. We start up new businesses, we create better processes, and we invent new things that make life better. I mean if you think about some of the improvements in our lifestyles just over the past generation it’s been pretty mind boggling over that period of time.

As Warren Buffett once said investors have underestimated the United States for 240 years at their detriment and he is always going to bet on future innovation and future growth. So when we do look forward to the long term, that’s really how we’re investing. We’re not investing for the next 12 to 18 months. We can speculate about that quite a lot but we are investing for long-term goals and objectives. We are optimistic about the long term for some of the reasons that that I just talked about and we feel that there’s no reason why future generations aren’t going to have a better lifestyle than current generations.

National Debt

But, there is one big fly in the ointment and that is the burgeoning national debt. This has not been something that’s just come upon us, but it is increasing. If you look at a chart of the growth in the national debt in the United States it looks like a hockey stick right now. The national debt is now $33 trillion — that’s trillion with a “T” — and is expected to grow substantially over the next 30 years. At the beginning of the Trump Administration, it was under $20 trillion so the national debt has grown by 70% since then. Since the beginning of the Biden Administration the national debt has grown by 22%. That’s just unsustainable.

If you want to look at it another way, the interest that that we’re going to pay on the national debt this this year, during 2024, for the first time ever will be more than what we spend in the United States on national defense. The result of this is as the United States issues more Treasury securities to finance this debt, unless there’s enough demand to soak up all this increase in Treasuries, interest rates are going to go up on this Treasury debt.  So that interest cost will continue to go up and that can crowd out investment in other areas. It’s just like the economics that we all learned, so that is that’s definitely concern. It’s not something that is going to drive the economy into a ditch in the next year or two but it’s going to get increasingly worse. It’s a little bit like the frog in the boiling pot of water.


It’s Tax Time! File by April 15th.

So, on that upbeat note I’ll also mention one other quick thing. As I’m recording this video we are coming up on April 15th when you want to file your tax returns. Now, many of Agili’s clients extend their tax returns, but it’s important to note that when you’re filing an extension you still have to pay in what you owe for the year. Get your materials together for your tax returns and if you need any assistance from the financial strategists at Agili, please let us know.

I’ve been very pleased to share with you our thoughts and viewpoints for the spring of 2024. If you do have any other questions you can contact me or your financial strategist at Agili. Thanks and have a great day.


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