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10 Predictions for 2024 With Bob Doll
Episode 304
REFLECTION ON LAST YEAR'S PREDICTIONS
Bob Doll reflects on his previous year's predictions, noting that while they achieved a 50% accuracy rate, it fell short of their usual 72% mark. The unexpected strength in the economy and labor market, combined with a decrease in inflation, led to deviations from their projections.
- The economy was stronger than expected, preventing the anticipated recession.
- Inflation continued to decrease but did not reach the central bank's target of 2%.
- Stock market valuations increased, particularly for a small group of high-performing stocks.
OUTLOOK ON THE US ECONOMY FOR THE UPCOMING YEAR
Bob predicts a mild recession for the upcoming year, citing residual issues from Federal Reserve tightening and an inverted yield curve. He expresses skepticism about the current optimistic outlook for a soft landing in the economy.
- A mild recession is anticipated due to ongoing economic tightening and yield curve inversion.
- The labor market remains strong, posing challenges for reducing inflation.
- A shift from almost unanimous recession expectations to widespread soft landing predictions is observed.
10 PREDICTIONS FOR 2024:
Bob explains that the ideal 'Goldilocks' scenario of perfect economic balance is unlikely. The predictions for 2024 involve trade-offs between strong earnings growth and low inflation, which are mutually exclusive under current economic conditions.
1. The U.S. economy experiences a mild recession as the unemployment rate rises above 4.5%.
2. The 2-3% inflation ceiling of the 2010s becomes the 2-3% inflation floor of the 2020s.
3. The Fed cuts rates fewer than the six times suggested by the Fed funds futures curve
4. Credit spreads widen as interest rates decline.
5. Earnings growth falls short of the double-digit percentage consensus expectation.
6. Stocks record a new all-time high early in the year, but then experience a fade.
7. Energy, Financials and Consumer Staples outperform Utilities, Healthcare and Real Estate.
8. Faith-based share of industry AUM rises for the eighth year in a row.
9. Geopolitical crosscurrents multiply but have little impact on markets.
10. The White House, Senate and House all switch parties in November.
THE ONLY THING CERTAIN IS UNCERTAINTY
The main focal point for 2024 is likely to be whether investors enjoy further significant progress on inflation, decent economic growth and double-digit earnings growth.
We’re skeptical. Either 1) we get a noticeable slowdown/recession and earnings fall short, or 2) double-digit earnings growth materializes, probably requiring stronger economic growth, less progress (if any) on inflation and a Fed that is boxed in.
The long-predicted recession will likely materialize in 2024, although it most likely will be brief and shallow.
Also, after the largest growth in the money supply since WWII (due to COVID), we’re now experiencing the biggest decline since the 1930s. Can a productivity boom rescue the U.S. via AI, automation and robotics? Only time will tell.
We expect the 2023 momentum and Fed cut euphoria to fade early in the new year, resulting in lackluster earnings growth and downside risk to equities as 2024 unfolds.
At some point, the political dysfunction in Washington, D.C., and record non-recession, non-war deficits will pile up even as interest expense takes an even larger share of
ON TODAY’S PROGRAM, ROB ANSWERS LISTENER QUESTIONS:
- I purchased a $10,000 I bond back in October 2022 with high rates; should I keep it for a few years and continue investing in it or consider liquidating it?
- As a truck driver, I spend a lot of time on the road and I'm considering selling my mob
Published on 1 year, 11 months ago