It’s that time of year again. Predictions for the coming year and all the faux expertise that comes with it. I broke predictions down by categories but they are not in any particular order or conviction.
Generally, I just consider the scenario more likely than not to happen and sometimes more likely than general consensus suggests. At least things will trend in that direction. After all….
A great way to squirm out of any prediction accountability is to say you are putting a 40% probability on it
If you’re right : “Yes, we definitely thought there was a strong possibility of this occurring”
If you’re wrong: “Well, we always knew there was a 60% chance of it not happening so technically we were right”
Markets and The Economy
S&P 500 finishes 2024 at 5200or up approx. 9% on the year.
Current mainstream forecasts are a bit less optimistic expecting values ranging from 4200 - 5100. Their assumptions include an EPS growth in 2024 of between 8% ~ 12.3% but a stable P/E around 24 by year end
I think EPS growth will be a bit better overall (perhaps 15%) due to the effects of “efficiency” (layoffs and hiring freezes) kicking in to help maintain profitability. Surgical refinancing of shorter term, high interest debt will also help bolster the EPS numbers starting mid year if rate cuts start. I agree P/E will likely remain between 22 and 27.
There will be fewer rate cuts by the Federal Reserve than the market currently expects. 4 cuts at most in 2024
The current FOMC range is between 5.25%-5.5% with the market pricing in 6 rate cuts (1.5% reductions) for 2024. The Federal Reserve is broadcasting just 3 rate cuts in 2024 (0.75%) with more only coming in 2025 and and 2026.
Overall, Jerome Powell has been a man of his word and “legacy” is a word which will start being thrown around more and more for him this year. I think he will lean to the side of caution and ensure restrictive rates keep inflation from re-emerging rather than being forced to reverse course and raise rates again
Stealth bailouts and liquidity programs will continue beyond March 2024
To compensate for a more shallow rate cut trajectory, Fed programs to maintain stability in the financial system such as the BTFP (Bank Term Funding Program) will be extended past their current expiration or be re-invented as something new to achieve the same goals
Fiscal spending and interest expense warnings will grow louder and louder as the U.S. election approaches but not by enough to materially change trends or issuance demands. This will keep another tailwind going for consumption as the government continues to run deficits.
World News & Politics
2024 U.S. Election is a legal whirlwind of wild and unorthodox events yet no one really cares. We see a rematch of 2020. Trump wins and returns to office
The primaries, caucuses and conventions themselves will have exceptionally low turnout and ratings due to a general malaise in the population. Despite a new, wild accusation against the other side each day, none will particularly gain momentum as a “KingSlayer” gaff
Democrats take the loss better than many expect as they admit defeat in the election. Biden’s Presidential term ending causes a new generation of Democrats at State and Local levels to come out of hiding at the end of 2024 who are more centrist and pragmatic. Using Trump’s win as a rationale, efforts to rethink the Party’s message to voters creates a drift RIGHT for the LEFT wing.
India and Turkey becoming recurring news topics as a tug -of - war builds for them to side among China, Russia or the U.S for regional influence and dominance
India’s economic relationship with the west continue despite some bad PR due to, well, assassinating people in Canada and buying Russian oil for cheap. But other than that, things will continue as usual for them and your IT guy will still help you when needed.
Turkey will aggressively try to position itself as the “bell of the ball” trying to leverage its NATO voting power to benefit itself as much as possible for anyone with a sweet enough offer. The surrounding regional conflicts on land, air and sea will make a Turkey a deciding factor in outcomes depending whether they opt to fan the flames or put them out.
Climate change conversation drifts from prevention of rising temperatures to coping with a hotter world .
People admit limiting global temperature rise to 2 degree Celsius is not going to happen. COP28 did nothing useful and despite green energy advances, we’re still decades away from meaningful impact. Take fossil fuels. World demand for liquid oil products is expected to rise 2% this year to a record 102 million barrels per day and will rise another 1-2 million next year despite all the investment to date
In a surprising twist, retirement meccas and boom cities start centering in on new areas of the globe. Areas further north (away from heat waves, blackouts and droughts) like rural Vermont, Idaho and Montana become more in demand and are seen as an untapped resource for soon-to-be Gen X retirees who spent their lives in urban / white collar environments.
Dreaming of a good life in Boise
Lifestyle and Pop Culture
A.I. continues to show enormous gain of function in the lab for narrow tasks and research purposes but fails to hit critical momentum for a viable value proposition in enterprise organizations any deeper than it already has
I get it. The tech is impressive. So was the Segway when it was announced. But image/video generation and copywriting were not particularly valuable to a big company prior to AI — or since— as the dime a dozen copycat sites arose eating into margin and profitability
A lot of things already marketed as “AI” like customer service reps, document review, and basically Alexa or Siri will still be in our lives and get better at those tasks but when was the last time you suddenly applied a new AI tool to your job? It’s still a way off I think.
For now, AI would be equally ridiculous in an average office
2024 Paris Olympics are the lowest watched of modern games
Honestly had no idea the Olympics were happening this year or where until I remembered it always falls on a Presidential election year. As far as I know, there are no Michael Phelps types competing to draw a crowd. UFC Slap fighting may actually score better ratings
I will admit, the events make for some GREAT TraderDads Obscure Prop Bets
Streaming services like MAX and Netflix are hit with a surprising revenue cap as Ad supported models come back into vogue
Subscription inflation, the loss of such pastimes like channel surfing and a few breakthrough shows like Freevee’s The Jury get older millennials and some Gen Z interested in more traditionally formatted content delivery again. It’s great to get a breather with Ads to go pee sometimes or just flip through channels and catch a random 20 minutes of The GodFather on TV “since it’s on”.
Content from streamers contracts sharply to compensate for the revenue caps. The production arms begin taking less risk and rely on consistent actors on repeat movie deals to fix costs more aggressively.
Moonshot / Game Changer Thoughts
RFK. Jr and his TBD running mate create enough excitement and momentum to actually lock up an electoral college vote(s) somewhere in the country as a 3rd party candidate
Both Maine and Nebraska allocate the electoral votes in a semi proportional manner meaning a plurality of votes can create an electoral college vote
The TBD running mate with RFK. Jr may be the key to push his momentum over the edge. (I am currently available if RFK. Jr is reading this)
Quinnipiac Poll November 2023
The “value” of human touch and social interaction starts a new realm of price discovery, marketability and acceptance (or pushback)
Aging populations, population declines and a more integrated experience with AI and virtual reality result in a clear distinction for competitive edge on getting to interact with a real human being . Example — People will pay extra to speak to a real human being rather that a chatbot similar to a luxury upgrade on an airline.
The loneliness epidemic among portions of the population drift porn, dating services and prostitution legality into new territories with things like “right to have sex”. Someone will definitely make the news for trying to legally marry their AI girlfriend/sex doll.
A.I. helps scientists have full form conversations with intelligent animals such as bees, crows and dolphins
The program will named Dr. Dolittle (obviously)
Mainstream discussion of animal rights and responsibilities will have their 15 minutes of frontpage news before people forget and move on
We’ll see.
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Thoughts? Questions? Comments?
Reach out! Maybe I’ll do a full post on the topic or as a Q&A
