(2023-Dec-23)
2024: the year of the S&P493
The US likely entered its most anticipated recession in history in November just as the “Covid helicopter money” dries up. We can expect sizable post Christmas layoffs starting in retail and travel industries. The stocks usually make a peak just before entering recessions and there is often a moderate drop off from which point it bottoms in the darkest hours of recession (while few are looking), likely in 2024 Q3 or Q4. This is all consistent with our long term view of wide-range-bound equities market for several years to come as the Boomer retirement is fully in the rear view mirror (late in the decade). However, that does not mean all stocks are a bad holding for 2024. It is entirely possible that the S&P007 will retrace its stellar ride just enough to satisfy the demands of a slow-down. Accumulation of “normal” business shares at bargain prices may be just the thing to do sometime in 2024.
The Purchasing Manager’s index is arguably the most useful of the “(occasionally-)Leading indicators” of the economic activity. Below we see that it either leads or is coincident with the relative performance of growth/risky equities vs the “defensive” equities. It is now clearly signalling a down-turn in the cyclicals (most notably the S&P007).
