As 2024 draws to an end, it is an appropriate time to evaluate those calls.
Frankly, forecasting the future is a dicey business.
Even if a magic formula existed, how would wild cards or unforeseen events be assigned as a variable?
If past events solely shaped future events, then historians would be futurists, making fortunes in the futures market, which is not the case.
So, given that the future has countless variables interacting in a myriad of ways, let’s take a look at how those calls in 2024 played out in a piece Darren Winters wrote entitled, “Headlines In 2024″, posted December 2023.
On the geopolitical front, the year ended as it started, with tensions escalating in multi-front wars in Europe and the Middle East.
Geopolitical tensions impact portfolios with risk-off assets and safe havens, attracting capital away from risk-off assets.
“If past events solely shaped future events, then historians would be futurists, making fortunes in the futures market, which is not the case”
WIN INVESTING
Conflict in the Middle East tends to cause higher oil prices, which impacts inflation
“Geopolitical tensions, WW3 enters the mainstream lexicon,” Darren Winters wrote.
In the Middle East, the Israel-Hamas war expands on multiple fronts, with Lebanon, Iran, Turkey and Syria supporting the Palestinian military struggle for the survival of Palestine and its people.
Israel, a proxy state, is attacked on multiple fronts, including US military bases in Iraq,” Darrren Winters wrote.
NATO’s grim warnings about tensions escalating with Russia over the Ukraine invasion in 2022, which evolved into a full-blown war, were numerous in 2023. The latest NATO warning in December 2024.
“NATO’s grim warnings about tensions escalating with Russia over the Ukraine invasion”
WIN INVESTING
NATO Chief Mark Rutte, who has led the alliance since October, said it needs to shift to a wartime mindset as Russia’s threat grows.
Moreover, conflict is likely to worsen, according to NATO Chief Rutte.
We are a short distance from where “Russian bombs are falling … Iranian drones are flying, and North Korean soldiers are fighting,” he said, referencing the complexity and global nature of the conflict with Russia.
The Middle East war also made headlines in 2024 as crude oil prices shot higher.
Forecast worsening heightening geopolitical tensions plays a big part in getting right where safe haven assets are heading.
“Safe haven currencies, USD and CHF, and precious metals, BTC, outperform, make headlines in 2024 as the war escalates,” Darren Winters wrote.
“Euro depreciation and sovereign debt crisis could make headlines in 2024” – Darren Winters
That call played out with USD, CHF, precious metals and BTC all heading to multi-year record highs
“Central banks finally pivot to fend off a banking liquidity crisis, improving global liquidity conditions benefits US assets.”
The Federal Reserve made three rate cuts in 2024, with a 25-basis-point reduction in November and a more aggressive 50-basis-point reduction in September. The Fed funds rate ended the year at 4.25% to 4.5%, which is still in a restrictive range, bearing in mind the neutral rate when monetary policy is contractionary is 3.1%.
Moreover, the Fed in December signalled fewer rate cuts for 2025
The People’s Bank of China (PBOC) also cut interest rates in 2024, sending the one-year LPR to 3.1% and the five-year LPR to 3.6% in October 2024.
The ECB made another 25 basis point, bringing the deposit rate to 3% in December, with the next move likely to be in neutral territory,
BOE held the interest rate in December at 4.75% despite acknowledging that the economy was worsening.
BOJ also held rates firm in December at 0.25% as the end weakened to four-month lows.
So, the major central banks cut their base rates in 2024 to improve liquidity conditions and support the economy.
But the Fed, ECB and BOE base rates ended the year 2024 in restrictive territory, and the pivot to easing has yet to come.
“Euro depreciation and sovereign debt crisis could make headlines in 2024,” Darren Winters wrote.
Most of the major traded currencies depreciated against the USD in 2024. The EURO, the world’s largest single bloc currency and second most traded currency in the world, after the USD, lost 5.65% year to date against the USD,
GBP also shed 1.33% against the USD year to date.
The Japanese Yen bucked the trend, appreciating 10.99% against the USD year to date.
“The cyclical bull market in stocks and risk assets continues, with stocks making new highs making headlines in 2024”
– Darren Winters
Darren Winterscalls in 2024, a euro depreciation against USD did play out, and while another sovereign debt crisis did not happen this year, factors contributing to an EURO sovereign debt crisis are present
Debt load continues to grow faster than the economy, which could lead to less support for southern European nations.
So, another euro sovereign debt crisis could still play out.
Regarding the UK general election, my calls that labour would win were correct
The UK general election is scheduled for 2024 and must happen no later than January 2025. Labour will most likely win,
A slowing UK economy and declining living standards made a Labour UK government in 2024 was a virtual certainty.
“A left-leaning government is likely to result in more public spending and a worsening public deficit, which would further depreciate the currency,” Darren Winters wrote.
But that didn’t play out.
In the seven months leading up to October 2024, the deficit was £64.1 billion, which is £4.5 billion less than the previous year. So GBP performed better than forecasted.
We could be in a new paradigm where the political power in government becomes irrelevant.
“More bank financial institution failures could hit the headlines in 2024.”
Two banks failed in 2024, so those calls for more bank failures played out
The first FDIC-insured bank failure of 2024 occurred in April.
First National Bank of Lindsay, the second bank failure occurred on October 18.
Fitech, Synapse Financial Technologies also filed for bankruptcy in April.
Central banks remaining above the neutral rate continue to cause stress.
Calls in 2024 of bonds continue to rally as central banks declare victory on inflation was partially correct
“The cyclical bull market in stocks and risk assets continues, with stocks making new highs making headlines in 2024,”
Those calls of a bull market in stocks and risk assets were accurate.
Risk assets, stocks, and cryptos all benefit from improving liquidity conditions.
