Ten Things For
2024
As some of you may know, I like to do a “Ten
Things…” for the upcoming year. I draw this inspiration from a man named Byron
Wien would compile a list of “Ten Surprises” for the upcoming year. I first ran
across his work when he was a big shot at Morgan Stanley in the 1990’s. Unfortunately,
Mr. Wien passed away in October at the age of 90. So now you, my dear reader,
are just simply stuck with me. In the same vein as Mr. Wien, I will concentrate
on the financial markets, although with 2024 being a presidential election
year, I will have a few comments about that. With all that in mind, here are my
ten things:
1.
Inflation Is Not Dead Yet Over the past 18
months, inflation has really dropped, going from a high of 9.1% in June 2022 to
a current level of 3.1%, per the latest report from the Bureau of Labor
Statistics. Fed Chairman Jerome Powell is being hailed as a hero for bringing
down inflation without creating a recession. I am predicting that inflation
will be higher at the end of 2024 than it is today. Why? Why am I seeing
that respected stock market investors, strategists and commentators are recommending
stock market sectors like metals, commodities, real estate and energy? These
sectors scream inflation to me. When the greatest stock market investor of all
time is making significant purchases of an oil stock, that is going to get my
attention.
2.
We might get one or two interest rate cuts in early
2024, but by the end of the year, speculation will center on when the fed will
raise rates.
If inflation indeed does rear its ugly head again 2024, can talk of interest
rate hikes be far behind? Right now, the talk is of interest rate cuts, as the
fed put in its latest minutes. I have never bought into a rate cut at this
time. I still think the money supply is too high.
3.
The one word to describe the economy: uncertain. Right now, everything
is humming nicely. There is a scary underside to all this. The consumer is holding
record levels of credit card debt, record levels of mortgage debt and record
levels of car debt. Notice a pattern? Credit card debt is the scariest to me. A
couple of years ago, I wrote that I thought the economy would be in a recession
by now. I am clearly wrong on that, but why? Employment has held up better than
I thought it would. But this economy is literally a house of (credit) cards. If
employment cracks, it will fall fast and it will fall hard. It is hard for me
to say that the good times will keep on rolling. However, if employment holds
up, things will continue for awhile. I am not sure which way to lean on this.
4.
The AI bubble will burst. The stock market
has been all about The Magnificent Seven this year. These stocks are some of
the leaders at the cutting edge of the latest technology craze, Artificial
Intelligence. Alphabet (Google), Amazon, Apple, Meta Platforms (Facebook),
Microsoft, Nvidia and Tesla have combined to account for about 70% of the S&P
500 index return this year. The index is up nearly 26% this year. Without the
Magnificent Seven, the return would be about 6 – 7%. If inflation comes back
(see #1 above), these seven stocks will be in for a big ride down. Usually such
extremely narrow leadership is quite bearish for stocks in general, and
especially for the leaders.
5.
The world will be relatively quiet. This is coming
from a purely American centric point of view. War continues in Ukraine and in
the Middle East. None of the parties
involved seemed interested in any sort of peace. So, the tragedies and atrocities of war go on. But
I do not see anything headline grabbing occurring in these places.
6.
President Biden will not be the Democrat’s nominee for
President.
The Presidential election next year will be the biggest news event of the year
in this country. Right now, the President’s poll numbers are in the high 30’s.
And that is with a relatively strong economy and very low unemployment. Polls
starting to show the President losing the election next year are deeply concerning
to Democrats. Vice-President Harris will not ascend to the nomination. It will
be someone else, with the name I hear a lot being Gavin Newsom.
7.
Travis Kelce will get engaged to Taylor Swift if you care about
that sort of thing which I do not.
8.
The San Francisco 49ers will win the Super Bowl if you care about
that sort of thing, which I do. Not sure who they will beat, but the one team I
know they will not beat is the Kansas City Chiefs. Too many distractions, too
many issues for the Chiefs this year.
9.
The Kansas City Royals will win the American League
Central in 2024.
The Royals have made some interesting additions to their pitching staff this
offseason, while nobody else in the division has done anything significant. Going
from 56 wins to division championship is a tall task, but not impossible in
this case.
10. 2024 can be a
great year for all of us! And with that I close this out. May 2024 bring you
peace, health and prosperity. Not just for you, but for your family and your
friends. Merry Christmas and Happy New Year everyone!
