Max King’s 2023 review and 2024 outlook

Last year, I poked fun at the annual “Ten outrageous predictions” charade, pointing out that it was a win-win exercise. If one of them actually happens, you are a genius for forecasting it. If none of them happen, well, you said that each one was very unlikely so you were still right. Still, I couldn’t resist a win-win bet, so I tagged along with my own list. I deliberately made my “predictions” less than “outrageous” in order to seek genius status. In fact, they worked out pretty well.

2023 predictions review

1. Kamala Harris becomes president of the United States as Joe Biden is forced by ill health to step down.
Not yet, but still possible. More likely is that the Democrats draft in Michelle Obama at the last minute to avoid defeat by Donald Trump. 

2. Extensive Russian influence in the West is exposed, which is why Russia was confident that the West would not respond to its invasion of Ukraine.
No, but I still wonder… 

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3. Russia has not yet been defeated by Ukraine, but I still expect a Ukrainian victory in 2024 or 2025 rather than the endless stalemate predicted by the media.
However, the risk of China invading Taiwan has clearly receded, perhaps as a result, perhaps because President Xi Jinping has other expansionist plans, perhaps because there are pressing domestic problems. 

4. China did end its lockdown without the widely expected surge in deaths.
However, lockdown as a policy option in a pandemic has not been discredited. Its failure has merely been covered up around the world. China’s economy has not bounced back, which is a consequence of the unwinding of a massive speculative bubble in property. However, financial crises are intrinsic to economic development. 

5. The oil price has indeed fallen (it is now below $80 a barrel) and so has the price of gas in Europe and the UK. As predicted, the government’s price cap did not rise by 20% in the spring, as forecast by the always wrong Cornwall Insight–  it fell. Why does the media pay them any attention? The revenue from the windfall tax on oil and gas companies and on low-carbon generators of renewable electricity in the UK has been much lower than expected, while the fall in energy investment in the UK is a reality. 

6. Inflation has fallen faster than expected towards the 2% target in the US, but more slowly in Europe and the UK, although it is still below 5%.
As I forecast, there is no recession in the US, Europe, or even the UK, but interest rates are not yet falling. 

7 Equities did have a good, but not great, year overall: they were up, down, then up again. Technology stocks did perform well, but smaller companies and investment trusts did not, although discounts to net asset value (NAV) started to come down towards the end of the year. The UK did again underperform, becoming even cheaper relative to other markets. 

8. Sterling has risen by five US cents against the dollar but is well short of my $1.40 target.
The biggest surprise, but not in my predictions, was its 19% rise against the yen. Government bond yields did climb as I forecast, reaching a peak in October. House prices have fallen, but the data, perhaps inaccurately, suggests only modestly. 

9. The postal service collapsed last Christmas, which ensures the continued downward spiral of Royal Mail. That the performance of British Rail would continue to worsen was more a statement of the obvious than an outrageous prediction. 

10. Chancellor Jeremy Hunt claimed to have cut taxes in the November Autumn Statement, but the rising share of taxes in the economy shows this claim to be false.
Taxes have indeed risen again, paving the way for my bonus forecast: that Hunt would lose his South West Surrey seat at the next general election. It hasn’t happened yet, but speculation is now widespread. The result of the election won’t be a Labour-Conservative coalition, but the government will be indistinguishable from one.

2024 outlook

What about 2024? 

• I expect inflation to keep falling and recession to be avoided. 
• The media will scaremonger about energy prices, but rising supply and sluggish growth in demand should keep them down. 
• Interest rates will be trimmed, but bond yields will stay high as real yields continue to rise until governments get serious about controlling spending. 
• Stockmarkets will have a good year as growth in corporate earnings picks up, valuations having derated sufficiently to compensate for higher bond yields. 
• Wall Street will continue to lead the pack, helped by strong productivity growth, while Britain will continue to lag, held back by the dead weight of the public sector

These are hardly outrageous predictions... I’ve had enough of those.

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