I’ve always loved Christmas, but I think I’ve lost much of the spirit as I’ve gotten older. Now that I have a young son—who enjoys baking cookies with his mom and eyeing presents under the tree, while struggling to behave under the eye of the “Elf on the Shelf"—I find myself recovering much of what I’ve lost. This is wonderful, but, as a father, I also find myself reaching deeper into the meaning of the holiday.

Is it time to start thinking differently about asset allocation, or does the 60/40 portfolio still make sense? That was the question for members of our Investment Management and Research team—and the topic made for some lively discussion.

Watch the video below to hear what the team thinks about this longstanding investment strategy. And if you're looking for a broader economic and market view, click on 2024 Outlook in the sidebar to your right.

When we put together economic and market outlooks, we typically focus on the near term—the next month, the next quarter, or the next year. As the great philosopher Yogi Berra noted, “It’s tough to make predictions, especially about the future.” So, we tend to stay close to the present, where we know more and can at least set some reasonable expectations.

There was a fair amount of data this week, but only one thing mattered: the Fed. Continued slowing inflation data and signs of a slowing economy took the Fed from a hawkish, we will keep rates higher-for-longer stance, to a much more dovish stance in the past meeting. The Fed's projections have switched from higher rates indefinitely to an expected three rate cuts next year, which is a very big shift. More, Chair Powell's commentary in the press conference acknowledged directly both the better inflation data and slower growth. Higher for longer may be dead—at least that’s what markets think.

This week, the Federal Open Market Committee (FOMC) met and voted unanimously to hold rates steady for the third consecutive meeting, leaving its policy range at 5.25 percent to 5.5 percent. This decision comes as no surprise, with the futures markets indicating a near-zero percent chance of a rate increase in the days and weeks leading up to the meeting.

It was another good week for the economy, while there wasn’t a lot of news on the market front. Let’s take a closer look.

Markets improved last month across the board as interest rates pulled back on signs of slowing growth. U.S. markets were up by high-single to low-double digits, while international markets were also up by high-single digits. Even fixed income posted gains of around 5 percent. For the first time in a while, everything went up.

What mattered this week in the economy and the markets? Let’s dive right in.

In my October blog post, I concluded by stating that in an intermediate time frame, things looked shaky for markets. Still, I firmly believed that the S&P 500 was undergoing a correction and that the uptrend would resume in due course. Indeed, since October 31, the S&P 500 is up more than 8 percent and the Nasdaq is up more than 10 percent.

Interest rates are back in the news again, along with a feverish dissection of the latest meeting notes and comments from the Fed. Will the Fed cut rates or not? When? How much? Surely, the Fed has to. That means markets are going up! And so they rise.