Max King’s 2023 review and 2024 outlook
Max King reviews his “outrageous predictions” for 2023 and his outlook for 2024.
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…
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.
After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.
-
How to invest in nuclear power
We need nuclear power to go green, says Dominic Frisby. But there is a better option than huge power stations
By Dominic Frisby Published
-
Chase slashes its easy-access savings rate – is it time to switch?
The Chase easy-access savings account has proved popular with savers thanks to its competitive rate and bonus deals. But, as the rate has dropped, has it lost its charm?
By Katie Williams Published
-
How to improve economic output using the supply-side approach
Boosting potential economic output through public investment is crucial, says David C. Stevenson
By David C. Stevenson Published
-
Mexico passes controversial judicial reform – will it hurt investors?
What will Mexico's new reform mean for investors and the country's economy?
By Alex Rankine Published
-
Indonesia’s new $30 billion capital city is hit by 'delays'
What is causing the delays in Indonesia’s new capital city and when will it be complete?
By Stuart Watkins Published
-
Maduro clings to power in Venezuela – can he last?
While Maduro clung to his presidential seat, Venezuela's election protests paint a different picture
By Dr Matthew Partridge Published
-
CrowdStrike IT outage: a global meltdown
Millions were affected by the CrowdStrike IT outage recently, which grounded flights and took the news off the air. Was this just a hiccup or a warning of much worse to come?
By Simon Wilson Published
-
Revolut founder Nik Storonsky cashes in – what's next for the fintech billionaire?
Nik Storonsky has shaken up the banking industry with Revolut. He is now preparing a new project that could do the same to the venture capital sector
By Jane Lewis Published
-
Is local production making a comeback?
Companies return production closer to home and shorten their supply chains due to the pandemic and geopolitical turmoil. How should investors react?
By Dr Matthew Partridge Published
-
French election: an unexpected win for the left-wing
The snap French election delivered a stalemate. What does this mean for the country's stability?
By Dr Matthew Partridge Published