Before I get to the daily ups and downs of the financial markets, I want to spotlight a worsening global problem: cybercrime.

A glance at the daily headlines tells you that the global cyber war continues to rage. Major breaches of corporate, government and personal data are occurring more frequently, in all areas of life, and they are getting larger in scope.

Companies are increasingly defined by the right combination of 1s and 0s, not by bricks and mortar. This digital transformation has given rise to “the extended enterprise,” and with it a breeding ground for attacks on IT systems.

There’s been an epidemic of cybercrime and financial fraud and with it, the emergence of an industry to combat it.

It’s not just corporations and governments. Individuals are increasingly under assault by cyber crooks, in a variety of ways.

The phenomenon of cybertheft is exacerbated by the growing involvement of organized crime. Many financial losses have been traced back to the bank accounts of specific criminal organizations, especially in Russia and Eastern Europe. These tech-savvy gangsters won’t whack you; they’ll hack you.

According to estimates released on February 26 by the research firm Statista, the global cost of cybercrime is expected to surge in the next four years, rising from $9.22 trillion in 2024 to $13.82 trillion by 2028.

The following chart, released Monday, tells the story:

Cybercrime is defined by CyberCrime magazine as the “damage and destruction of data, stolen money, lost productivity, theft of intellectual property, theft of personal and financial data, embezzlement, fraud, post-attack disruption to the normal course of business, forensic investigation, restoration and deletion of hacked data and systems, and reputational harm.”

This rising incidence of hacking, cybercrime and industrial espionage is creating robust demand for corporate security.

The U.S. continually accuses China of hack­ing the computer systems of American military and media organizations; South Korea is pointing the finger at North Korea for similar provocations; and large retail stores regularly report massive cyber breaches. U.S. financial institutions have reported sustained attacks from hackers located in Eastern Europe. The list goes on and on.

Through it all, Russian state-sanctioned hackers are persistently disrupting American elections, starting with the 2016 presidential general election and continuing into the 2020, 2022, and 2024 contests. (I recently wrote an article that highlights a top investment play on the trends I’ve just described.)

The latest on Wall Street…

Now, let’s look at the markets.

In 2023, the stock market’s gains were led by the technology, communication services, and consumer discretionary sectors. However, in recent weeks, sector leadership within the S&P 500 has exhibited signs of expansion. The financials, industrials and health care sectors are catching up.

This shift towards a broader leadership hints at a more equitable distribution this year between growth and value-oriented assets. A key factor driving this sector rotation is the anticipated surge in earnings growth.

Forecasts indicate a jump in earnings for the Russell 1000 Value Index, rebounding from a -4% year-over-year downturn in 2023 to an estimated 7% upswing in 2024. This resurgence in earnings, particularly among value-centric enterprises, suggests that investors should strive for more balanced sectoral exposure.

The convergence of earnings growth across growth and value segments should mitigate the currently disproportionate influence of mega-cap tech stocks.

WATCH THIS VIDEO: Will The “Magnificent Seven” Ride High in 2024?

Meanwhile, the rekindling of inflation has injected uncertainty into market sentiment. The impending release of personal consumption expenditures (PCE) inflation data this week is anticipated to reveal a 2.4% year-over-year increase in headline PCE, slightly lower than the December reading of 2.6%.

Similarly, the core PCE, the Federal Reserve’s preferred metric, is poised to witness a marginal descent from 2.9% in December to 2.8%.

Despite the prevailing narrative of a downward inflationary trend throughout the year, recent market dynamics underscore the erratic nature of this trajectory.

Just a month ago, market expectations leaned towards a 50% likelihood of a Federal Reserve interest rate cut in March. However, current expectations align more closely with a status quo stance from the Fed through March and May, with the prospect of rate cuts now slated for around June.

As fresh inflation numbers loom, the main U.S stock market indices closed mostly higher Tuesday as follows:

• DJIA: -0.25%
• S&P 500: +0.17%
• NASDAQ: +0.37%
• Russell 2000: +1.34%

As you calibrate your portfolio for 2024, don’t ignore alternate investments…such as cryptocurrency.

Consider this fact: the “blue chip” of crypto, Bitcoin (BTC), gained 156% in 2023. BTC and the broader crypto realm are on the cusp of a new bull market in 2024.

Every portfolio should have some sort of exposure to crypto. But you need to be informed, to make the right choices. Start receiving our FREE e-letter, Crypto Investing Daily. Click here now!

John Persinos is the editorial director of Investing Daily.

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