2024 What to Watch

2024 What to Watch

Well folks, welcome to the year 2024.  Something very nostalgic to me about turning the page to a new chapter.  As a matter of fact, I’ve always gotten emotional around the next chapters, especially graduations.  There is just something bittersweet about reflecting on the times that were and speculating about the times that will be. 

This leads me to the point of this article.  I figured I’d give a little look behind the curtain at the main global items we are keeping our eyes on for the upcoming year and how they affect the markets.

Inflation

Man, am I sick of talking about inflation. That said, this is one of the biggest topics of the year to keep a look out on.  I may even go as far as the largest topic we are trying to keep a pulse on.  It is so large mainly because of the domino effect it has on everything else.  What are we watching?  Mainly, to see if inflation continues its downward trend.  Not overly concerned that it hits the Fed’s 2% target, more so making sure it continues its trajectory towards the Fed’s ideal goal.  The gist here is will the economy continually right itself.

Federal Reserve

I could classify this almost as 1B, but what fun is that?  The offshoot of inflation, that everyone is really focused on, is interest rates.  When will the Fed lower rates?  By how much?  What increments?  The Fed typically does a fairly good job of being opaque with their thinking.  In doing so, we stay keenly in tune with what they say, and what they don’t say.  There are so many implications when they adjust rates, that it will be critically important to keep our proverbial finger on the trigger to make sure we are positioned most opportunistically both before and after the Fed acts. 

Unemployment

As the Fed’s tightening continues to play itself through our economy what will it do to our historically low unemployment rate?  This really determines if we will achieve that soft landing everyone is hoping for.  However, if unemployment really spikes the Fed will have a different issue than inflation, how to jump-start a slowing economy.  What sectors will win and lose, along with what parts of the world economy will favor well?  Being the Fed has 2 mandates, full employment and 2% inflation, keeping an eye on unemployment will be important for us.

Recession

The past three items really go a long way to determine if we are heading towards, avoiding, or already in a recession.  We are less concerned if you call it a recession or not.  Rather, our focus is more on where we are in the economic cycle and what needs to happen to get us back on the growth track. 

Elections

Knock knock…. Is it Groundhog Day?  For those that aren’t aware we have an election year this year, and a leap year!  Naturally, this means a lot of media play as we likely, somehow have a repeat of the last election (SMH).  Now I am always one to downplay the impact of elections on markets historically, and I still do so this year.  That said it is a very emotional topic, divisive topic, and one that we clearly must keep a watchful eye on.  Generally speaking, it is more about how emotional investors move markets and understand trends/momentum.

GDP

Gross Domestic Product is a great view of the entire US economy’s health.  Knowing we are going into a year where we are still dealing with the fallout of the Fed’s hikes, and inflation, it is important that we understand the most macroeconomic impact.  Basically, how is our overall economy fairing through all the turmoil?  Sometimessssssssss, the media exasperates the news of what is going on.  GDP is a great way to cut through all the noise and understand the facts.

War

What is it good for, absolutely nothing…. That said we are dealing with 2 different wars currently in Russia and the Middle East.  There is also the looming threat of what China intends to do with Taiwan, of shall I say the most anticipated war of our times.  Wars are simply unpredictable on so many fronts it is hard to speculate.  It also means we must be nimble and attentive to how these different fronts are impacting US and Global economies.  What companies and industries fair well etc.  Certainly, hoping for peace everywhere, but in the meantime, we are keeping a watchful eye.

Naturally, there are a myriad of other items we are keeping a close lookout on.  That said these are what I’d consider the biggest Macro items that we know are all over our radar as we speak.  I am hopeful for a good year ahead, and as always it will come with lots of excitement.  Wishing everyone a prosperous year ahead and as always stay wealthy, healthy, and happy.