On January 17, Bhaskar Laxminarayan, the Chief Investment Officer for Asia and Head of Investment Management at Julius Baer Private Bank, predicted that the Federal Reserve will start cutting interest rates as early as May this year, with a total of 3 rate cuts totaling 75 basis points. He also expects the federal funds rate to drop to 4.25% by the end of 2025. As the Fed enters a rate-cutting cycle, other central banks around the world will follow suit, but the Bank of Japan will raise rates to 0.2% by the end of this year. He stated that with US inflation continuing to slow to target levels and benefiting from the imminent easing policy, Julius Baer remains bullish on US stocks, particularly high-quality growth stocks in the technology and healthcare sectors. Bhaskar Laxminarayan expects that the growth of the US economy will be limited in the first half of the year, especially due to uncertainty surrounding the timing and magnitude of future rate cuts. He predicts that the tension caused by the end of the rate-hiking cycle may persist in the first few months of the first half of the year. Therefore, he is not surprised by the unstable start to 2024, but expects confidence to gradually recover as investors begin to digest the positive prospects for 2025 and beyond. Julius Baer believes that the US economy will expand this year, albeit at a slower pace, and remains optimistic about the prospects for mega-cap technology stocks, as well as growth stocks in the healthcare sector. The bank remains bullish on the theme of artificial intelligence (AI), particularly Generative AI (GenAI), which has the ability to quickly tackle very complex problems. Additionally, the number of companies integrating AI into products across industries such as healthcare, automotive, advertising, and education is rapidly increasing. Market interest in GenAI technology has provided a new round of upward momentum for the stock market, especially driven by large tech stocks. As we enter 2024, Julius Baer is more optimistic about the prospects for emerging market stocks (excluding China) as emerging market economies have better growth prospects in terms of GDP and corporate profits compared to developed markets. The bank believes that the most promising market in emerging markets this year is the Indian market. Due to a potential shift in Japan's monetary policy this year, the outlook for the Japanese market is favorable. The bank has upgraded its rating on the Japanese stock market to 'hold' based on various factors. In addition, with the recent transition from deflation to inflation in the Japanese economy, businesses and the economy in general are expected to benefit. Furthermore, the Tokyo Stock Exchange has implemented several important reforms to improve governance, enhance efficiency, and make corporate valuations more attractive. Finally, with further inflows of domestic and foreign investor funds, asset prices are expected to rise.