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Lori Zager & Lisa James
November 20, 2023
Our 10 Surprises for the New Year
By 2X Wealth Group
In memory of famous investor Byron Wien, who was known for his list of 10 surprises each year, we provide our own list of potential economic, financial, and political surprises for 2024. Byron started the tradition in 1986 when he was chief investment strategist at Morgan Stanley and continued publishing it at Blackstone until his death earlier this year. A concept is considered a ‘surprise’ if the average investor assigns a less than a 1 in 3 chance of its occurrence, but we give it a more than 50% chance of happening.
The List
  • Inflation is not going back to 2%. In order to maintain credibility, the Federal Reserve needs to maintain its mantra of reaching a 2% goal, whether it is possible or not. We believe low population growth and lack of workers will keep the pressure on wages, deglobalization will reverse the deflationary trends of the past, and shrinking commodity supply will pressure prices.
  • The Federal Reserve does not cut interest rates in 2024. Read Jerome Powell’s lips - “We aren’t even talking about dropping rates.” The market is predicting rate cuts, but we think the Fed is not going to risk a rebound in inflation like the 1970s. The only circumstance leading to a policy change would be an unexpectedly severe recession.
  • The U.S. enters a recession in 2024. There are long lags between raising interest rates and slowing the economy. This time, the lag could be extended due to the pandemic stimulus payments. Recently, job growth and availability have slowed, and the banks are restricting lending. Defaults on credit cards hit a 10-year high in September and auto loan defaults hit a a 29-year high last month.
  • Oil prices will not fall as much as expected in a recession and will quickly rebound. Historically, when companies underinvested in commodity capital spending prior to a recession, commodities subsequently outperformed the S&P 500. Recently, the growth of ESG investing has led to reduced capital spending in energy and metals. Today, capital spending for the oil supermajors is 30% below 2019 levels and 60% below the 2010 to 2016 average.
  • Interest rates will fall in a recession but will likely rise again soon after. As economic activity recovers interest rates naturally rise. With U.S. national debt at 121.6% of GDP, the sheer volume of current Treasury bond issuance causes rates to go higher.
  • Gold will continue to outperform government bonds. While both gold and government bonds are a safe haven in times of economic or political stress, the supply of physical gold is not rising nearly as quickly as the supply of bonds. Further, as the volume of Treasury issuance rises, we are also seeing a decline in foreign buyers who were once substantial holders (think China and Japan).
  • Trading of oil and other commodities will be done in currencies other than the dollar.  The rising value of the dollar has increased the cost of buying commodities in local currencies around the world. Foreign countries would prefer to trade in their own currencies for both geopolitical and cost reasons.
  • The U.S. Presidential election will not be Trump versus Biden. We can always hope. At what point do age and criminality become issues, and what about a third-party candidate?
  • Chinese economic growth rates will rise again. President Xi will pivot due to the poor results from the pandemic lock downs and communist party policy to restrict large technology company’s power.
  • Political instability will cause food insecurity in less developed nations. Food insecurity and political instability often influence each other. In 2024, the political instability of war combined with the actual destruction of arable land and nutrients will cause food scarcity.
In the spirit of surprises, we were reminded of an old joke by famed investor David Einhorn: A newscaster reports, ‘The Russians launched ICBMs at America this morning, causing the stock market to plunge, but it rebounded sharply in the afternoon on a rumor that the Fed might cut the discount rate.’ …Investors have been conditioned to ignore geopolitical risk.”  We think investors should be less complacent in the current environment.
If you would like to discuss how these perspectives influence our investment strategy, please send us an email or give us a call.
* * *
We have given a nod to Byron Wein in past blogs. In October of 2020, we came up with our own list of 10 inevitables - a little twist on the concept of surprises. Below is our list of concepts that we believed were either necessary or inevitable in the future.
  • As a country, the U.S. needs to address those who have suffered the most during the pandemic.
  • The economic status of lower income citizens needs to improve, or we risk increased social unrest and the inability to grow our consumer spending-based economy.
  • With healthcare costs skyrocketing in the last decade, affordable healthcare in the U.S. must happen.
  • The crumbling infrastructure in the U.S. must be fixed.
  • U.S. debt rising as a percentage of GDP and the concomitant printing of U.S. dollars destabilizes our currency and pressures the dollar’s value.
  • The dollar will eventually be replaced as a reserve currency, possibly by a new multi- government cryptocurrency.
  • The recovery in the U.S. will lead to increased inflation this time, partly due to changes in Federal Reserve policy allowing inflation to run hot (above 2%).
  • Legalization of marijuana is a matter of when, not if, and may help fund some of our borrowings.  
  • China will challenge the U.S. as the world’s most important economy.
  • Emerging markets have much to gain from positive population demographics and a weaker dollar.
Happy holidays!

The material included herein is not to be reproduced or distributed to others without the Firm’s express written consent. This material is being provided for informational purposes, and is not intended to be a formal research report, a general guide to investing, or as a source of any specific investment recommendations and makes no implied or express recommendations concerning the manner in which any accounts should be handled. Any opinions expressed in this material are only current opinions and while the information contained is believed to be reliable there is no representation that it is accurate or complete and it should not be relied upon as such. Investing involves risk, including loss of principal, and no assurance can be given that a specific investment objective will be achieved.  

The Firm accepts no liability for loss arising from the use of this material. However, Federal and state securities laws impose liabilities under certain circumstances on persons who act in good faith and nothing herein shall constitute a waiver or other limitation of any rights that an investor may have under Federal or state securities laws.

2x Wealth Group is a team at Ingalls & Snyder, LLC.,1325 Avenue of the Americas, New York, NY 10019-6066 |
(212) 269-7757

May 19, 2023
A Pollyanna* Market?

If you just landed from Mars and we told you that three good sized U.S. banks had failed, the Federal Reserve had raised rates 5% in 13 months, the yield curve had been inverted since last year, the latest Senior Loan Officer’s Survey showed banks less willing to lend while already at recessionary lending levels, and according to Treasury Secretary Janet Yellen, we are within two weeks of the government running out of money to pay its obligations, would you believe the S&P 500 is up about 9% thus far this year?

BY 2X Wealth Group
March 23, 2023
RUN on the BANK

How Banks Work
What Causes Banks to Fail
How the Government is Responding
How Bank and Brokerage Accounts May Be Protected
Dilemma for the Federal Reserve

BY 2X Wealth Group
November 1, 2022
The Federal Reserve Has Taken the Punchbowl Away - We Are Worried About a Hangover

We suspect most people think getting inebriated is more fun than sobering up.

BY 2X Wealth Group
March 17, 2022
Inflation is as Violent as a Mugger, as Frightening as an Armed Robber and as Deadly as a Hit Man

We hate to sound like a broken record and ruin the party, but inflation presents a problem which won’t be easily fixed.

BY 2X Wealth Group
March 17, 2022
Regime Change

The four most dangerous words in investing are “this time is different”.

BY 2X Wealth Group
December 28, 2021
Investment Jargon for the New Year

A Tongue in Cheek Guide to the Latest Investment Concepts

BY 2X Wealth Group
August 31, 2021
From Beijing to Wall Street

The Changing Investment Climate

BY 2X Wealth Group
June 2, 2021
Bitcoin Billionaire???

Mine your reward coins as you read our blog!

BY 2X Wealth Group
February 3, 2021
Robinhood, Reddit, Gamestop and You: The Making of a Financial Flash Mob

Who doesn’t love the story of David’s triumph over Goliath? This past week a group of “small” investors made tremendous amounts of money (on paper at least) by buying stocks that were heavily shorted by large, sophisticated hedge funds.

BY 2X Wealth Group
October 28, 2020
Tricky Times

Markets hate uncertainty, and we can’t remember an election with such potential disparate outcomes. As we speak, the presidential race looks closer than ever, and the Senate majority is in question. Meanwhile the pandemic rages, and the President and Congress can’t agree on a stimulus plan. It’s no surprise stock market volatility has risen.  

BY 2X Wealth Group
September 15, 2020
Ash & Anxiety In the Air

Fires are burning. The presidential election has never been more heated, and our whole election process is repeatedly questioned. The cold war with China continues to brew regardless of the political party in power. A global pandemic has taken hundreds of thousands of lives and jobs, created loneliness for our seniors, and caused those entering hospitals for medical procedures to endure alone.

BY lori Zager & lisa James
June 11, 2020
Rip Van Winkle fell asleep after ringing in the New Year in 2020  

He woke up today and asked us for an update. We explained there was a global pandemic that had claimed almost 400,000 lives worldwide and more than 100,000 in the United States.

BY lori Zager & lisa James
March 30, 2020
Contagion and Containment:
How can we treat our ailing financial markets?

Medical experts say widespread lockdowns and social distancing must happen to contain the coronavirus and avoid overwhelming our hospital system.

March 19, 2020
The S&P 500 Catches
the Coronavirus

Bombs and tweets couldn’t sink the S&P 500, but Covid-19 did.

December 20, 2019
Why Gold Often Glitters

While there is a role for gold in a diversified portfolio, gold is not universally liked or owned by investors and wealth managers.

September 23, 2019
Alarming Spike Last Week in Banks' Short-term Funding Costs

The rates on overnight repurchase agreements, known as repos, suddenly rose above 9% last week.

May 30, 2019
Why do We Care About the Shape of the Yield Curve? What Does it Tell Us?

We never really know where markets and the economy are headed, but market participants constantly look for clues.

Lisa James
November 15, 2018
The Art of the deal

Why does the current market tone feel different from the February and March stock market selloffs? 

Lori Zager & Lisa James
June 5, 2018
What role do Bonds play in your portfolio?

When do they protect you? When do they hurt you?

Lisa James & Lori Zager
March 22, 2018
Rising Interest rates? Inflation? How do they affect you?

The 10-year US Treasury bond bottomed in July of 2016. Since then, the interest rate on the 10-year has more than doubled from 1.39% to 2.9%.

Lori Zager & Lisa James
February 8, 2018
Volatile Markets

Worst Day Ever for the Dow Jones Industrial Average!

Lisa James & Lori Zager
November 20, 2017
Concerned about buying at the top

Perspective As the current bull market ages (from the bear market end in March 2009) investors are increasingly worried about buying at the peak.

Lori Zager
August 1, 2017
The Difference Between An ETF And A Mutual Fund

The basic difference between a mutual fund and an exchange traded fund (ETF) is that an ETF trades like a common stock as its price changes throughout the trading day.

Lori Zager
June 9, 2016
Brexit Flight to Quality

Brexit is spurring a flight to quality move into US Treasuries.

Lori Zager
June 1, 2016
Does it make sense to buy dividend paying stocks?

The short answer is yes.

Lori Zager

The views and opinions expressed in the posts on this page  are those of the author and do not necessarily reflect the position or views of Ingalls & Snyder, LLC.  Certain content on this page were originally  posted in a personal blog maintained and operated independently by the author prior to joining Ingalls & Snyder, LLC. 

The content on this page are for informational purposes, and is not intended to be a formal research report, a general guide to investing, or as a source of any specific investment recommendations and makes no implied or express recommendations concerning the manner in which any accounts should be handled. Any opinions expressed in this material are only current opinions and while the information contained is believed to be reliable there is no representation that it is accurate or complete and it should not be relied upon as such.  Investing involves risk, including loss of principal, and no assurance can be given that a specific investment objective will be achieved.