AJ Bell’s Mould: Five investment themes to watch in 2024

Mould has drawn up a shortlist of the factors that could come into play

AJ Bell investment director Russ Mould


We have reached that time of the year where investors take stock and set their sights on what is to come in the next twelve months.

The world we live in does not lend itself to one or two simple answers on what markets will be hit by over the coming months, but it is possible to draw up a shortlist of the factors that could come into play.

This is exactly what AJ Bell investment director Russ Mould has done.

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“Basing investment strategies on just one scenario is probably not going to be a good idea and portfolio construction may need to address a range of outcomes, especially as we have elections to be fought, and electorates to be influenced, on both sides of the Atlantic in the next 12 months,” he said.

“Carefully following five major investment themes may help investors sense which way the wind is blowing so they can try to obtain the best possible risk-adjusted returns for their portfolios, especially once they take the all-important issue of valuation into account.”


“Debt-to-GDP is one barometer to watch, but according to the Bank of International Settlements it should be studied in conjunction with the percentage of tax income that is used to meet the interest costs,” Mould said. “When that latter figure got to around 20% in 2007 the financial markets buckled and nearly took the global economy with them.

“China and France are the two countries in this invidious position now, but the USA is catching up fast, as the Biden administration spends like fury on the CHIPS and Inflation Reduction Acts. 

“America’s latest annual fiscal deficit was $1.7 trillion in the year to September 2023, the third-worst number on record, and the annualised interest bill has hit $1 trillion, or 20% of tax income. America cannot afford to keep interest rates where they are for long and there is a risk that the Fed has to cut rates to keep the burden manageable and take risks with inflation. 

Mould added that this may be why gold and bitcoin are on a roll. Markets are pricing in five rate cuts from the Fed in 2024, but because inflation is cooling and growth benign, not because debt is a problem and interest costs are squeezing economic growth


“The 1970s’ inflationary outburst may have been prompted by loose monetary policy in the UK and loose fiscal policy in the USA, followed by 1973’s oil price shock, but a vicious circle of higher pay demands and higher prices then developed,” Mould said.

“While it seemed tin-eared, this was why Bank of England governor Andrew Bailey has pleaded for pay restraint in 2023. In addition, this may help to explain why deputy governor Ben Broadbent is placing so much emphasis upon wages and their influence upon policymakers’ thinking in his latest comments.

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Mould noted that financial markets may t cheer a modest increase in unemployment, while central bankers accept it, as higher joblessness could help to put a lid on wages and inflation and thus provide scope for rate cuts. Equally, a sharp rise in the jobless rate could signal economic trouble.

The Magnificent Seven

“The stock markets’ rally in 2023, and the return to favour of Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA and Tesla, suggests equities are pricing in an economic soft landing and a return to the low-growth, low-inflation and low-interest-rate environment of the 2010s that did so much to help the performance of long-duration assets like bonds and growth sectors, such as technology.

“They might be right. But if they are wrong – and those five Fed rate cuts do not appear on schedule in 2024 – then the Magnificent Seven’s aggregate $11.8 trillion market cap could look exposed, for all of their dominant positions in their respective industries.

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“Their share price and profit wobbles of 2022 showed they are not entirely immune to the economic cycle, so an unexpected recession could be one challenge. Sustained inflation could be another if it keeps rates higher than expected and boosts nominal growth from downtrodden cyclicals and value stocks. Again, only a perfect middle path may do.”

The yield curve

“Bond yields are falling again, but the yield curve remains inverted, whereby ten-year yields on government bonds are lower than those on the two-year in the UK and USA. This is seen as a warning that a recession is on the way, as it means bond markets are factoring in interest rate cuts (the ten-year would usually have to offer a higher yield to compensate holders for the extra risk scope for things to go wrong over the longer lifespan of the debt).

“It is not an infallible signal, but examples of soft economic landings are hard to find and stock markets are currently doing their best to ignore the bond market’s quite different message.”

Oil and copper

“If equities are pricing in a soft landing and fixed income markets a harder one, commodity traders are even more confused. Oil’s renewed weakness may speak of recession. Copper, a reliable indicator of global economic health due to its many uses, is doing nothing. Gold looks to be fretting about debts and stagflation.

Mould said the messages from stocks, bonds and raw materials are therefore contradictory, but such are the globe’s debts that it seems likely central banks would rather play fast and loose and risk inflation or stagflation than recession and deflation.

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