Posted on 01/09/2024 9:37:31 AM PST by lasereye
A year ago, Wall Street's forecast painted a bleak picture, foreseeing a prolonged bear market into 2023, with an average price target of -2.4%. Concerns loomed large over high inflation and anticipated tightening monetary policies that could trigger a recession that year. It marked the first time since 1999 that Wall Street had predicted a downturn for stocks.
However, the consensus proved remarkably wide of the mark, as the US economy exhibited exceptional resilience. The S&P 500 defied expectations, closing the year with a surge of 26.3% at 4,769, significantly surpassing Deutsche Bank's most optimistic target of 4,500.
Looking ahead, the predictions for the upcoming year are notably diverse. Yardeni Research stands as the most bullish, forecasting another double-digit increase, while JP Morgan adopts a considerably bearish stance, projecting nearly a 12% decline. On average, the street anticipates a marginal gain of +3.8% for the S&P 500, reaching 4,950.
The chart above shows the most up-to-date price targets and potential upside/downside percentage changes from the S&P 500 closing price on December 31, 2023.
The Bull: Yardeni Research Market veteran Ed Yardeni emerges as the most optimistic voice, setting a target of 5,400 for the S&P 500. Yardeni foresees a resilient economy, moderated inflation, and an upsurge in productivity. His thesis paints a picture of the "Roaring 2020s," driven by advancements in artificial intelligence and robotics, poised to enhance companies' efficiency and profitability.
The Bear: JP Morgan Conversely, JP Morgan adopts the most pessimistic stance, projecting a price target of 4,200, reflecting an -11.9% decline. This stands as the most bearish forecast seen from a sell-side research firm, marking the first time a double-digit negative return target has been witnessed. It's unusual for Wall Street to endorse negative forecasts, because it's bad for business.
"In our 2024 outlook note, we anticipate a more challenging macro backdrop for stocks next year, with softening consumer trends coinciding with investor sentiment and positioning largely reversing," stated JPMorgan's Marko Kolanovic and Dubravko Lakos-Bujas.
Their outlook identifies risks posed by elevated equity valuations, soaring interest rates, a weakening consumer landscape, escalating geopolitical tensions, and the looming specter of a potential recession.
The upcoming year promises to be intriguing, marked by a pivotal Presidential election, heightened consumer credit concerns, and various potential challenges. Will the S&P 500 be resilient amidst these risks once more? For those keen on insights from the Runnymede investment team, our quarterly client conference call is scheduled for next week. DM me with your email address if you'd like a replay, and we'll promptly send it to you post-broadcast.
Happy New Year! We hope that you had a wonderful holiday season, and we wish you a prosperous and healthy 2024!
Are you feeling bullish or bearish about 2024?
Chris Wang, Director of Research at Runnymede Capital Management, Inc.
“Are you feeling bullish or bearish about 2024?”
I’ll have a better picture as soon as Republicans get serious about not letting the Rats steal another election. We will know a lot more by July. If Biden’s popularity is down to 10% and do-nothing / know-nothing Harris keeps cackling and mixing word salad, the economy will look more promising.
Why would I not keep a buncha short term TBills in hand?
Articles such as this one are interesting. But I always keep in mind a story told by Vanguard founder John Bogle.
While he was in college, Bogle worked as a runner (messenger) for a brokerage firm. One of the older runners took Bogle aside, and gave him some wise investment advice.
“Nobody knows nothin’.”
T-bills are wavering. 1 year is below 5%. When the Fed begins lowering rates, short term bills will quickly lose their luster.
Which will drive up equities.
“Are you feeling bullish or bearish about 2024?”
I don’t care about a year. I’m interested in 5-7 years. I’m very conservatively diversified, following Buffet’s First Rule: “Don’t lose money.” 70% Bonds, most of the stocks are boring high-dividend payers. +9.0% for 2023 and at a record high, fine with that.
“T-bills are wavering. 1 year is below 5%. When the Fed begins lowering rates, short term bills will quickly lose their luster.”
Yes, but I don’t think we are near any rate drops. I think we may get one more .25% raise first. Close to a third of my T-Bills mature every month, so I can be pretty nimble when stocks become the strong horse. Market does look ahead but it’s expecting too much too soon.
Ed Yardeni: Come back in the water is nice & warm.
His general take is pretty well supported other than Black Swan events which are unpredictable anyway. The huge govt spending coming on infrastructure will support the economy and jobs, we’ll see how much given the crosscurrents.
That huge government spending is the cause of the inflation to begin with. It will only cause more. It is destroying the economy in the long run.
It’s much more complicated than that, too much to go into here.
To entice people to buy them, they have to raise the interest rates, which will only add to debt load down the road.
Q3 Bond Market Meltdown: Why and What's Next?
I'm sure I missed a lot. but hey, that is enough to cause dire warnings.
Thanks for your thoughtful discussion. I’ve been expecting a small rate cut in March.
Best wishes for catching big fishes with your investing! Being old I’m just trying to ride the waves and not fight them these days. Just looking to keep the boat floating high enough to avoid taking on any water.
Ha! Hang onto your hat this year. Looks like we're in for a wild ride if the two geriatric POTUS candidates are on the ballot in November.
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