Shulmaven did not cover itself in glory in 2023. (See: Shulmaven: 2023: Another Year of Living Dangerously ) We got much of it wrong:
* The economy did not enter a recession.
*Stocks did not trade in a broad range of 4200-3300 and instead approached its all-time high of 4800.
*Bitcoin didn't collapse to below $10,000 and and instead more than doubled to over $40,000.
*Trump was not a spent force and he now seems cruising towards nomination.
* The market has yet to recognize we have entered a new 13-year cycle.
We got a few things right:
*The Fed remained on the warpath for much of the year and wage gains remained solid.
*10-Year Treasury yields stayed above 4% for much of the year. Coincidentally the yield ended where it stated at 3.9%
* Ukraine struck deep into Russia with missiles and sabotage as global tensions remained high.
Now, in the spirit of being often wrong and never in doubt here are my views for 2024:
* With the S&P 500 trading just below its all-time high and the VIX index at 12, I believe 2024 will be year of high volatility coming from volatile international and domestic politics. Think 1968.
* The stock market appears to be ignoring the warning of former Secretary of Defense and CIA Director Robert Gates where he noted in the November/December issue of Foreign Affairs "The United States now confronts graver threats to its security than it has in decades, perhaps ever."
* In retaliation for attacks on Ukraine's power plants, Ukraine will set ablaze several of Russia's prize West Siberian oilfields.
* Israel will defeat Hamas sufficiently to declare a victory and by yearend Saudi Arabia will be on track to join the Abraham Accords. (See: Shulmaven: Hamas Aggression Must be Punished)
*Domestically all of the signs point to a Trump victory for the Republican nomination and his victory in November, hardly a confidence building eventuality. Nevertheless, I am not yet predicting a Trump victory; I think it is a 50/50 call as of today.
* The Fed will do whatever it takes to avoid a recession in 2024. Their recent pivot is a step in that direction. Objectively the Fed will join the Committee to Re-Elect the President. (CREEP, the name of Nixon's campaign in 1972.) As a pillar of the establishment and fearful of its independence, the Fed will effectively be all-in for Biden. Thus the Fed will plant the seeds for a very problematic 2025.
* Core CPI will likely run at a 2-2.5% rate in the first half, but accelerate to a 3% run rate by yearend. As a result the yield on the 10-Year Treasury will once again be north of 4%. In keeping with my view that we are in a new 13-year economic cycle, wage growth will remain solid.
* In this environment the S&P 500 should trade in a broad range of 5000-4200, approaching both ends more than once during the year, with the VIX exceeding 30 at least once during the year. Consistent with the past month, the S&P 493 will outperform the Magnificent Seven.
No comments:
Post a Comment