We are pleased to share what has become a favorite research tradition here at Wavelength: predictions for the new year from our CIO, Andrew Dassori.
In 2023, the recession that most economists predicted never materialized and the resilience of both markets and the economy exceeded the expectations of many investors. This inaccuracy of forecasters, however, should come as no surprise given their well-documented inability to hit their target.
And while predictions can be humbling, we once again managed to get more right than wrong with last year’s edition. Beyond Brandon Fraser winning Best Actor and ChatGPT bringing AI into our lives, our calls for an end to the global monetary tightening and a rebound for bond markets came through, albeit towards the end of the period. We also had the right read on inflation, with it moderating but exceeding what was priced and increasing calls for a higher target.
With this backdrop, we know we can’t predict everything, and we recommend that investors hedge when they have less than a 50% chance of being correct and invest where they have a clear, repeatable edge. For considerations outside of the investment process, our predictions for 2024 are listed below. We wish you great health, happiness, and luck in the year ahead.
- With the support of excess cash fading, growth will slow under the weight of interest rates.
As detailed in Thinking Ahead: The Reality of Rates, excess cash accumulated in the pandemic that had supported increased spending is now drying up for both households and corporations. With this, the impact of interest rates is setting in. We expect incrementally higher debt service costs to drive the next phase of the cycle and create a steady drag on global growth.
- Income-generating assets will be relatively attractive as economies adjust to new conditions.
While a growing contingent of economists have made calls for a soft landing recently, risks of turbulence remain as the sharpest tightening in decades continues to flow through markets. In this environment, we expect the cushion of higher yields available across income-generating assets will offer key advantages versus other markets, particularly on a risk-adjusted basis.
- Google will take the lead in the generative AI horse race.
Consistent with last year’s predictions, ChatGPT took the world by storm with a powerful first move that brought generative AI to market. This helped its parent company, OpenAI, gain backing through a partnership with Microsoft that provides a critical platform for applications of the technology. While these developments were significant, Google remains the central gateway to the internet and has deployed unmatched resources to generative AI for years. With their much-anticipated release of Gemini, Google will reestablish its dominant position in the fast-changing landscape for artificial intelligence.
- The US presidential election will be decided by fewer than 100,000 votes.
In a country of over 330 million, it may be surprising that such a small number of votes could determine the outcome of an election. Under the electoral college system, however, that’s how things can add up. With current odds pointing to a rematch of candidates from 2020, the popular vote won’t make a difference and it will likely come down to a handful of states where the smallest of margins can decide who will represent the country as president.
- Astroforge will launch the world’s first commercial flight into deep space.
Armageddon brought the idea of space mining to the big screen in 1998, and since then several ventures have attempted and failed to tap the wealth of resources outside our atmosphere. Not until now has a company had a legitimate shot at making this idea a reality. After a demonstration mission this year, California-based Astroforge now has its sights set on a fly-by of a target asteroid for the extraction of platinum-group metals.
- The 49ers will bounce back to win Super Bowl LVIII.
On Christmas day in what may have been a Super Bowl preview, the AFC's top-ranked Ravens easily handled the NFC's top-ranked 49ers, winning 33-19 on the back of an excellent performance from the current favorite for league MVP, Lamar Jackson. On the opposing end of the field, Brock Purdy threw four interceptions in his worst game as a pro quarterback. Despite this lop-sided outcome, San Francisco remains in position to earn a #1 seed for the playoffs, and with a well-coached and talented roster from top to bottom, the 49ers will be motivated to bounce back from their loss and make a run at their first NFL title since 1995.
- Water stress will reach a breaking point.
Floods and droughts had major impacts on the world in 2023, and a changing climate is set to exacerbate many already dire situations. As we’ve seen between states, international disputes over water will add a new layer to geopolitical tensions in an increasingly polarized world.
- Oppenheimer will win Best Picture at the Academy Awards.
While Barbie held the top spot at the box office, the other half of this year’s Barbenheimer phenomenon will come out on top at the Academy Awards. Christopher Nolan’s complex and visually stunning biopic of the man behind the atomic bomb ultimately stands out in what was a welcome rebound year for Hollywood as a whole.
- Neauralink will be implanted in the first human.
The potential for Elon Musk’s brain-chip startup has been covered in past predictions, but now the company has received approval for its first human trial. This will focus specifically on paralysis patients using an implanted brain-computer interface to communicate their intensions to move, but the company’s broader ambitions for treatment of issues from autism to obesity may not be as far off as originally thought.
- Productivity gains will take shape in the US as companies implement new technologies.
As mentioned above, generative artificial intelligence made headlines over the past year and is a topic we also weighed in on from an investment perspective. Thus far, however, most companies have yet to apply this technology in day-to-day operations. That is set to change in the year ahead and unlock new potential for economies with the right infrastructure in place, putting the US in position to press its advantage through productivity growth.
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