2024 – What have we learnt?

Blain’s Morning Porridge, Dec 20th 2024. What have we learnt?
“Another year over, and a new one just begun…”

2024 was an “interesting” year – big questions about inflation, growth and geopolitics were all asked, but answers remain difficult. The politics of populism now dominates the agenda. Issues like climate change and ESG have been pushed aside. The lessons don’t change – trade what the market thinks, but invest in facts and likely outcomes.

This will be my last “daily” Porridge of 2024. I shall return very early in the New Year with the full healthy market breakfast service. Although I will be working holiday hours for the next 10-days – I am planning a “Big Read” to send to everyone during the break – it will be an essay around my annual Bubble of the Year Award. Meantime, I am delighted the BBC has invited me to opine on the global markets at the entirely reasonable hour of 5 am on both Christmas and New Years Eve! Wake up to Money and Radio 4’s Today programme are always great fun. If anything exciting happens during the holiday break – I will likely post a comment..

2024 has been an interesting year. I got some stuff right. I got some stuff wrong. I understand the world a little bit more. And what I understand, means it all makes a little less sense.

This time last year:
• I predicted Inflation would remain stubborn and sticky – so it has proved.

• I said the market would be led by Big Tech, and still be raving about how AI is going to change everything – but the only obvious change I’ve seen is the number of AI “experts” contacting me on Linked-In offering to integrate AI into my businesses!

• I wrote “stocks look over-cooked” (they still are). “Gold is a good option” proved a decent bet.

• Bang on schedule, and as I’d predicted, during the summer Central Banks started easing rates – at a far lower pace than the rest of the markets had anticipated. (My expectation for 2025 is that interest rates have pretty much bottomed in the wake of still smouldering inflation, and the fact Central Banks want to keep rates “normalised” at 1.5-2% above inflation – pretty much in line with what the Fed told markets on Wednesday.)

• I suggested Central banks would keep rates “normal”, meaning the Fed has room to repeat the ultra-low mistakes of the past by slashing rates again if conditions dictate the need for it. The BOE is struggling with inflation. Expectations central banks will ease into sub 2% rates are well wide of the mark – except that the SNB and ECB are already doing it. The ECB because of the gathering European crisis, and SNB because it can.

• The US economy is strong and resilient. Europe is not. The new UK government is talking the nation into a downturn. I did not expect the last of these.

Things I got wrong..

• My most spectacular gaff – and the biggest mistake I’ve made for a long while – was my call Kamala Harris would win the US Presidency. To be brutally honest – I fooled myself. I found a whole series of plausible reasons to convince myself she would win – many agreed with me. The post-election rally shows Trump was not priced in. My worst trade was a levered short on Truth Social – I was wiped out by morning on Nov 5th.

• Being short Tesla and Bitcoin in Nov were massive mistakes. I was being too clever. What the market believes is what sets the price – not what I think. A useful reminder the market will remain irrational longer than I can remain solvent.

• We have not seen tech breakthroughs in Fusion or Quantum Computing – but I am reliably informed these are coming.. Tomorrow, always tomorrow. When they happen – the world will really change.

Highlights of the year included the remarkable TV series Mr Bates vs the Post Office – which finally saw the disgraceful treatment of UK sub postmasters hit the public’s conscious. Yet, nearly a year later, it still drags on. The postmasters are still waiting for justice, having been offered risible settlements, and no-one has gone to jail from their employer. It’s stuck in bureaucratic treacle.

There is no shortage of corporate, political and market issues to write about every morning:

• Apple’s Crush advert in May was a self-inflicted shot to the head – while Jaguar’s recent carless ad… might, might have been very very clever. We will find out next year.

• Boeing remains the gift which keeps on giving in terms of things to write about. It remains one of the most hopeless companies on the planet. My big idea is that Elon Musk should buy Boeing – that would be transformational.

• Energy did not prove the broad crisis I feared it might become – despite the amount of power used to min Bitcoin and power AI.. power is generally available – but a cost of a record amount of coal being burnt to provide it – mostly in China! Nearly 5 bln tonnes!

• Nvidia remains the star performing stock – for how much longer?

• It has been Elon Musk’s year. They say pride cometh before a fall. Whom the gods intend to destroy they first build up.

• The UK election was a landslide for Labour – but they are in danger of wresting defeat from the jaws of victory. Starmer and Reeves mean well, but have the communications skills of an autistic whelk. We need confidence, leadership and clarity. Their dither has given groups, like those claiming to represent UK farmers, bogus credibility. Starmer apparently peeved Elon Musk by not inviting him to a tech conference, and now Musk intends to fund a right-wing coup using stand-up glove-puppet Nigel Farage as his front.

• The rise of Reform might well see them destroy the Conservatives in the near future. In the US MAGA is not Right Wing – it is populist and has embraced traditional policies for all sides of the political spectrum. Reform’s opportunity is similar – but as yet, there is little policy credibility around it as a potential government. That will change.

• Commercial property, particularly office space, is in crisis – meaning its ripe with hidden opportunity.

• The US election had everything. Trump surviving assassination, Biden realising the game was up. Kamala Harris failing to reveal herself. Trump winning may not be to everyone’s taste – but (aside from currently fermenting a govt shutdown) the signs are it will be managed by grown-ups!

I am going to put out a Big Read Porridge during the break. I’ve been lining up all my thoughts on one particular aspect of markets, and going to go away and think about it before publishing this side of new year. It will be my final piece of work for 2024.

It only remains for me to thank you for reading the Porridge, to have a very Merry Christmas and wish us all a Guid and Prosperous New Year…

Out of time, and I’m just back from a very cold swim before dropping this into your mailbox.

Have a great holiday…

Bill Blain
Author, The Morning Porridge
www.windshift.capital