Christmas is a Stress-Fest, but a good excuse for some predictions about 2024.

Blain’s Morning Porridge – December 22nd 2023: Christmas is a Stress-Fest, but a good excuse for some predictions about 2024.

“Sinatra was swinging, all the drunks they were singing, we kissed on a corner then danced through the night.”

Is it just me that finds Christmas and the Holidays to be overly stressy? They will be over too quick, and we’ll all be back as confused as ever. Here are some thoughts and predictions for 2024. The one thing I guarantee: The World is Changing.

And that’s all for 2023 Folks.

I am the Grinch. The puppy woke me at 3.30 am this morning wanting to play. I started writing something platitudinal about spending the next two weeks relaxing with friends and family, and my excitement about coming back recharged, relaxed and rejuvenated for the coming year – but deleted it. We all know the dream of a peaceful Christmas/New Year is delusional b*ll*x. The holidays are a mind-full, (very different from mindful), full-on, stress-laden battlefield. Folk don’t relax over the holidays. We stress.

I am thinking we need a Christmas free Christmas.

Most of us will spend much of the next 10 days stressed; travel, guests, dealing with families, or simply trying to coordinate the mechanics of putting a Christmas meal on the table as a single event. There will be stress about New Year and stress about getting back from wherever. If I find myself with the sheer luxury of doing nothing I know will find myself asking what should I be doing with the time?

If I could switch off I would. But who does? I’ll be watching the market feeds and news flow for a couple of media slots next week – filling the likely dearth of financial news with pithy observations on what’s not going on!

And then there is the weighty stress of knowing than we have to go back and do it all over again in just over a week – the only difference being changing the year number. I hate Sunday Nights. Inevitably I wake up exhausted in the middle of the night worrying about what might go wrong in the coming week. Magnify that worrying about a whole year. The thing is – we won’t come back to some magically changed-for-the-better world. Things will still be sh*t on January 2nd.

Bah. Humbug.

While I wish you joy, peace and love for the festive season, I simply hope you survive the stress of it all.

On the other hand….

There is a beautiful little dog fast asleep at my feet as I write this. I can hear my wife’s gentle breath from the bedroom as the only sound in the house. I will try to finish by 7.30 am so I can go for a swim in the River, which might restore my good humour. I have a dozen of my mates coming round for the Boy’s Lunch this afternoon. When the girls go out together they tell each other how much they love, support, and nurture each other. When the lads get together – we will happily insult each other and tell the same stories we’ve all heard a thousand times before, and we will all be delighted.

Maybe Christmas isn’t so bad…

Final thought for the year.: 2023 was not as bad as we feared, but neither was it as good as we hoped. We learnt a bit more, and are beginning to realise what things we have to unlearn.

The thing I see repeated every single year in markets is markets always over-react to upside and downside stimuli. That was very true in 2023 when the launch of Chat-GPT triggered a gold-rush into AI. Although AI will change the world, I suspect that Klondyke is already dug out. AI hopes and expectations drove the mega-rally in the Magnificent 7 Tech names – which has dominated the year. Then the extraordinary rally in bonds – partially fuelled by faster than expected falls in inflation, and then by the Fed’s extraordinary pivot towards easing earlier this month. Such comments have consequences.

As a result, my guess is the big issues in 2024 will likely include:

Inflation has probably topped, but the pace at which it continues to slow is critical. It is likely to prove more sticky than expected.
Rates will fall, but not a soon as markets hope and not by as much. Central Banks will be focused on normalised real interest rates – and we are unlikely to go back to the damaging distortions of negative real rates around zero – unless we have another deep crisis.
Corporate and Consumer indebtedness will become increasingly larger concerns on financial asset prices as defaults and provisions rise.
Speculation in stocks will be constrained by the realisation rates will be higher for longer – putting the relative value of stocks vs bonds into perspective. The result will be a refocus on fundamentals.
De-dollarisation is the monster under the bed. Its imaginary. If Trump looks likely to win in November, it could spark dollar weakness, and an opportunity to buy on an over-reaction.
Be nervous on banks – no reason, one should always be nervous on banks, especially when the world economy looks recessionary and bank bosses are claiming capital rules are too restrictive!
Politics will be a major issue for markets through 2024; starting with Taiwan in Jan, European Union election, the UK and what happens in the US. Wage demands, rising inequality and issues like migration will fuel both right and left populism.
Oil prices look weak at present, but that’s not unusual following a shock – recovery in China, a shallow recession in Europe and the resilience of the US could see further falls limited and potentially OPEC’s efforts to restrict production start to pay off, triggering renewed inflation.
A number of post-GFC, post-pandemic themes are still playing out – pain is likely to increase in consumer lending and commercial property, especially office space. As discretionary spending drops be nervous on luxury and large discretionary purchases.
Climate change and renewables have seen considerable pushback – but as evidence of just how extreme 2023 temperatures were, and the consequences of extreme climate events become clearer – mitigation will be re-elevated to a top level.
While 2023 markets were besotted with AI (the launch of Chat-GPT was the most extraordinary trigger moment I’ve seen in years), we’re likely to see new Tech moments arrive in 2024 across a broader real tech universe. Energy, Bio-Manufacturing, Capacitance (batteries) and health breakthroughs could characterise the coming year.
For the time being I reckon the bond rally is already done, maybe overdone. Stocks are over-cooked. Risks are high. Gold is still an option.

I was recently asked if there was any one thing that will change the world. Perhaps there is.

I’ve been watching Fusion – it’s always been tomorrow’s technology. But, signs are it may actually be getting closer. The “ignition” moment – when researchers managed to extract more energy than they put in – was achieved in California earlier this year. If one of the multiple research efforts on Fusion finds how to make it sustainable – then a new race begins. It will still take 15-20 years from finding the way to making it commercial, and it will be costly, but that time would need to see a massive infrastructure rebuild across the globe to take advantage of the economic energy-electrification fusion would offer. It would completely change the fundamentals of the global economy.

In the meantime, I go with every other energy analyst telling us that renewables are good, but we need a relaunch of nuclear power – and that means Uranium.

The Morning Porridge will return on Jan 9th when I hope to launch our new website!

Have a less stressy holiday than you fear.. May your dreams be merry and bright and don’t let the Christmas dinner defeat you.

Aw ra best for 2024

Bill Blain

Strategist – Author of the Morning Porridge