Observations: Closing thoughts for 2024

A few final observations at the end of a tumultuous year

It’s said that “You can lead a horse to water, but you can’t make it drink.” Sometimes I feel that way about my forecasts. While I correctly forecast the re-acceleration in US growth, payrolls and, most importantly, inflation, it seems to have been for naught. An obstinate Fed appears intent on ignoring compounding evidence that rates are not restrictive.

Similarly, my forecasts for geopolitical jockeying and unexpected international developments to accelerate during the presidential transition period also proved correct. Indeed, I seem to have significantly underestimated it. But tell that to options markets. The pricing of risk through inauguration day (and even beyond) remains historically low.

My concerns about the relative value of French sovereign debt also have been (re-) validated. But, perhaps surprisingly, the US fiscal outlook as abysmal as it is, may hold positive surprises emanating from the most unlikely places.

Below, I offer my closing thoughts for the year on these and other matters in the latest research from Thematic Markets.