2024: Biggest Year Ever

November 8, 2023

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2024 outlook

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It’s almost time for the 2024 previews and here’s my guess on a few themes. I don’t necessarily embrace these, it’s just a meta exercise to guess the crowd’s view. What do you think will be other popular turn-of-the-year themes?

• Canada in trouble. Mortgage resets finally matter, the always-around-the-corner consumer debt problem comes to a head, commodity prices falling,  weakening labor market, etc. BoC cuts before Fed. Receive 2y CAD rates.
• US soft landing achieved. Used car prices and oil prices are unchanged from 2021 after two wars. Buy risk parity, buy AUDUSD.
• US recession finally arrives. Worsening global demand collides with long and variable lags from US tightening and commercial real estate debacle as WeWork is the tip of the iceberg and the CRE tsunami finally hits shore. Receive 2y US and sell USDJPY.
• BOJ hikes rates in Q1 and signals aggressive normalization. This finally gives support to the JPY and MOF intervenes to back it up. USDJPY to 135.00.
• Continuation / acceleration of reshoring as China labor costs high, political risks high, and geopolitical considerations take precedence over one-time costs to relocate. USDMXN to 16.50.
• 2024 Election chaos. This will almost certainly be overplayed because this will be framed as the most important election in the history of mankind. The Fate of Democracy™ will no doubt hang in the balance. We almost always think the current election is the most important one ever. E.g.:

1796

1864

https://slate.com/news-and-politics/2020/11/most-important-election-of-our-lifetimes-history.html

The once every four years compulsion to call the current election the most important one ever is a function of chronocentrism: The belief that one’s own times are paramount, that other periods pale in comparison.

As Jorge Luis Borges put it: “(…) everything happens to a man precisely now. Centuries of centuries and only in the present do things happen; countless men in the air, on the earth and the sea, and all that really is happening is happening to me…”.

While the 2024 previews will sound compelling, don’t forget that they tend to be directional for about 4-6 weeks at the start of the year and then the inevitable unforecastability¹ of a complex system kicks in. Much as we can predict the weather for the next few days, the most we can predict the economy is the next few months.

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Bitcoin

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Bitcoin has rallied on a combination of capital flight following the bad news in the Middle East and the seemingly inevitable upcoming launch of a spot bitcoin ETF. At the risk of missing another leg of buy the rumor / sell the fact, the gold and EURCHF moves have petered out so if there is any geopolitical angle to the bitcoin rally, that’s probably done. Meanwhile, you could say that the market is well and truly long by now and Uptober is over.

EURCHF (inverted), gold and bitcoin, 30m chart 01OCT to now

The 20 trading days from 08NOV have been negative four of the last five years. The sample size is small, obviously, but in a sample where the price of the asset went from $300 to $35,000… You’re not going to find many bearish 20-day periods. We are entering one.

Bitcoin 20 day perofrmance starting November 8

Have a profitable day.

good luck ⇅ be nimble

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¹ Not a word.

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90% of countries in the world have been invaded by the British at some point.

See countries in red. The blue one is England.

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