It’s that time of year again. Predictions for the coming year and all the bogus know-how that comes with it. I’ve broken down the predictions by category, but they’re in no particular order or persuasion.
In general, I just find the scenario more likely than not to happen, and sometimes more likely than the general consensus suggests. At least things will move in that direction. Despite all these….
A great way to avoid any prediction liability is to say you’re putting one on 40% chance on it
If you are right: “Yeah, we definitely thought there was a good chance that would happen”
If you make a mistake: “Well, we always knew there was a 60% chance it wouldn’t happen, so technically we were right”
Current mainstream forecasts are slightly less optimistic expected values ranging from 4200 – 5100. Their assumptions include EPS growth in 2024 between 8% ~ 12.3% but stable P/E around 24 by the end of the year
I think EPS growth will be a bit better overall (maybe 15%) due to the “efficiency” effects (layoffs and hiring freeze) that will help maintain profitability. Surgical refinancing of short-term high-interest debt will also help boost EPS numbers from mid-year if interest rate cuts begin. I agree that the P/E will likely remain between 22 and 27.
The current FOMC range is between 5.25%-5.5% with the market pricing in 6 rate cuts (1.5% cuts) for 2024. The Fed is broadcasting just 3 rate cuts in 2024 (0. 75%) with more coming only in 2025 and 2026.
All in all, Jerome Powell has been a man of his word, and the word “legacy” is one that will begin to be thrown around more and more for him this year. I think he will lean on the side of caution and ensure that capping rates prevent inflation from re-emerging rather than being forced to reverse course and raise rates again
To offset a shallower rate cut trajectory, the Fed’s programs to maintain stability in the financial system, such as the Bank Term Funding Program (BTFP) will be extended beyond their current expiration or reinvented as something new to meet the same goals.
Warnings about fiscal and interest spending will get louder as the US election approaches, but not enough to materially change trends or issuance requirements. This will keep another windfall to consume as the government continues to run deficits.
The primaries, caucuses, and conventions themselves will have extremely low turnout and ratings due to a general malaise among the population. Despite a new, ferocious charge against the other side every day, none will gain much momentum as a ‘KingSlayer’ blunder.
Democrats are taking defeat better than many expect as they concede defeat in the election. The end of Biden’s presidency forces a new generation of state and local Democrats to come out of hiding in late 2024, who are more centrist and pragmatic. Using Trump’s victory as a rationale, efforts to rethink the Party’s message to voters is creating a RIGHT shift for the LEFT wing.
India’s economic relations with the West continue despite bad public relations due also to killing people in Canada and buying cheap Russian oil. But other than that, it will be business as usual for them and your IT technician will help you when needed.
Turkey will aggressively try to position itself as the “bell of the ball” trying to leverage its electoral power in NATO to benefit as much as possible for whoever has a sweet enough offer. The surrounding regional conflicts on land, air and sea will make a Turkey a decisive factor in the results, depending on whether it chooses to light the flames or put them out.
People admit that limiting global temperature rise to 2 degrees Celsius is not going to happen. COP28 did nothing useful, and despite progress in green energy, we are still decades away from any meaningful impact. Take fossil fuels. Global demand for liquid petroleum products is expected to grow by a record 2% this year 102 million barrels per day and it will grow another 1-2 million next year despite all the investments to date
In a surprising twist, retirement meccas and boomtowns are beginning to focus on new parts of the globe. Areas further north (away from heatwaves, blackouts and droughts) like rural Vermont, Idaho and Montana are increasingly sought after and seen as an untapped resource for future Gen X retirees who spent their lives in urban environments. .
I dream of a good life in Boise
I understand. The technology is impressive. So was the Segway when it was announced. However, image/video creation and copy creation were not particularly valuable to a large company before AI—or since—as a dime a dozen copycat sites were created with profit margins and profitability
A lot of things that are already out there as “AI” like customer service agents, document review, and basically Alexa or Siri will still be in our lives and getting better at those tasks, but when was the last time you suddenly implemented a new AI tool at work; It’s still a long way off I think.
For now, AI would be just as ridiculous in an average office
I honestly had no idea the Olympics were happening this year or where until I remembered it always falls in a presidential election year. As far as I know, there are no Michael Phelps types competing to draw a crowd. UFC Slap fighting may have better ratings
I admit events bring BIG bets TraderDads Obscure Prop
Subscription inflation, the loss of such pastimes as channel surfing and some groundbreaking shows like Freevee’s The Jury get older millennials and some Gen Z are again interested in delivering content in a more traditional format. It’s great to take a breather with the commercials to pee a few times or just flip through channels and grab a random 20 minutes The Godfather on TV “after it’s on”.
Content from streamers shrinks sharply to compensate for revenue caps. Production teams are starting to take less risk and rely on consistent actors in repeat film deals to fix costs more aggressively.
Both Maine and Nebraska apportion electoral votes in a semi-proportional manner meaning that a plurality of votes can create an electoral college vote
TBD’s companion with RFK. Jr may be the key to pushing his momentum over the edge. (I am currently available if RFK. Jr is reading this)
Quinnipiac Poll November 2023
An aging population, a shrinking population, and a more integrated experience with AI and VR result in a clear distinction for competitive advantage when it comes to interacting with a real human. Example — People will pay extra to speak to a real human rather than a chatbot similar to a luxury upgrade on an airline.
The epidemic of loneliness among segments of the population is dragging porn, dating services and the legalization of prostitution into new areas with things like the “right to sex”. Someone will definitely make the news because he tried to legally marry his girlfriend/artificial intelligence doll.
The program will be called Dr. Dolittle (obviously)
The basic debate about animal rights and responsibilities will get 15 minutes of front page news before people forget and move on
Interested in joining the Trader Dads Podcast in 2024? Send me an email! I would love to have subscribers sit down for a chat
Thoughts; Questions? comments;
I arrive! Maybe I’ll do a full post on the topic or as a Q&A
