The Year in Review and the Year Ahead, 2024: Expect Volatility, The ABC’s of XHB, The Road Ahead, and Gold’s 2023 Performance Brings Doubts into 2024
@DonMiami3, MacroEdge Chief Economist; @SixFinance, MacroEdge Head of Research; @MrAwsumb, MacroEdge Contributor, @MrAwsumb, MacroEdge Contributor; @RealJohnGaltFla, MacroEdge Contributor
The Year in Review and the Year Ahead (@DonMiami3, MacroEdge Chief Economist)
Happy NYE MacroEdge family -
Hope you all have set your goals sky high for 2024 and are prepping to a fast faced start to the New Year with everything going on in the world. Wanted to say a quick thank you to our over 900 subscribers and over 50,000 readers that have stopped by to read a MacroEdge piece in 2023. All of this is possible due to our nearly 25 contributors who have submitted their insight week in and week out for almost 6 months now. We’ve made TV, headline news stories, and broke news stories. All in all we finished oj a high note even with our ups and down.
I myself am very excited to get involved in the Motorsports industry next year & the MacroEdge team is continuing to do great work in prepping for our expansion in 2024. We’re rolling out 2024 vision over Q1 including new things like our Substack competitor - MacroEdge Lounge - where contributors can join & when approved can contribute pieces, more members than ever will be able to access our content and data, and we’ll be working on new partnerships with businesses to deliver cutting edge solutions to businesses across the nation.
For more information on our 2024 vision & what we’ll be delivering in 2024, feel free to get in touch with a team member at info@macroedge.net to learn more. Bring on a rare vacation myself I’ll leave it to our awesome team to take the floor for the duration of this weekly report & look forward to seeing you all in 2024. Have a fabulous New Years Eve and let’s buckle up for 2024 whether your on the ground level or cruising with champagne in hand at 38,000 feet.
Your friend,
Don
2024: Expect Volatility (@SixFinance, MacroEdge Head of Research)
2022 was the worst year for the 60/40 risk parity model since 1937, with stocks and bonds posting large losses both, as the FED announced the beginning of its’ quantitative tightening cycle and interest rate hikes to quell the inflation caused by the enormous monetary and fiscal stimulus of the COVID era. Wall Street as an aggregate did not expect 2023 to be much better, with an under 4100 finish expected amongst the consensus. Instead, the equity market roared higher, and we are poised to end the year at all time highs on most of the major indices. The bond market continued to fall for most of 2023, as the Federal Reserve continued to hike interest rates. OpenAI’s release of ChatGPT fueled an enormous tech rally that led to an explosion higher in tech valuations, with the poster child for this rally being Nvidia. The regional banking crisis in March was contained with the Bank Term Funding Program (BTFP) that currently is a nearly $130 Billion emergency liquidity facility for the bank sector. The Treasury QRA that showed the Treasury intends to issue debt on the front end of the yield curve instead of long duration bonds, along with falling inflation and rate cut odds being priced in heavily for 2024 greenlit a massive rally in bonds and all risk assets…
Full article included in this week’s MacroEdge Weekly Report only available at MacroEdge.net.
The ABC’s of XHB (@MrAwsumb, MacroEdge Contributor)
2023 was a whirlwind year in the Homebuilding world. If you paid attention to mainstream media and news sources, you’d probably think it’s been great. With reports of record gross sales ($’s not units) numbers and the SPDR S&P Homebuilders ETF XHB setting new highs. But let’s peak behind the curtain.
While this is called the Homebuilder ETF, the truth is that only 26% of the ETF’s holdings are Homebuilders. Those Builders, for reference…
Full article included in this week’s MacroEdge Weekly Report only available at MacroEdge.net.
The Road Ahead (@SquirtLagurtski, MacroEdge Contributor)
Hello everyone. Typically, I have been highlighting the freight market, its trends, and my outlook for the rest of the cycle. For this paper though I’d like to change things up and look at the road ahead. While 2023 was rife with volatility and uncertainty the new year brings a chance for rebalancing of perspectives as we all step into what I think will be a historic election, a recession, and like I have said plenty of times new opportunities. I want to stop and recognize however the changes which have happened which got us to this point. Covid was a historic event which we will feel the effects of for another three to five years, everything from monetary policy to social distancing; we have all been on the same train headed to the same destination. The question is what destination are we bound for? And what condition will we be in when we arrive? Regardless of where you sit on this ride, we all share a commonality, confusion. I can’t give you either of the answers but hopefully I can and have provided some extra beneficial context to keep in mind. I have spent much of my time seeking data to bring to you and it is my hope that I can continue to do so in 2024. Thank you for reading, and above all happy new year.
In this piece I am focusing on two recent reports, one from the Financial Stability Oversight Council, and another is a working paper from the National Bureau of Economic Research…
Full article included in this week’s MacroEdge Weekly Report only available at MacroEdge.net.
Gold’s 2023 Performance Brings Doubts into 2024 (@RealJohnGaltFla, MacroEdge Contributor)
The recent rally in gold has demonstrated that it is the preferred life preserver for central banks and investors during stormy times, but it has yet to do the dazzling breakout like the cryptocurrencies which has many doubting its historical importance. The main thing to keep in mind that in periods of persistent inflation, not just hyperinflation, gold will be the leading performing asset versus those soft investments like equities and crypto.
Add in a dose of global instability, including the risks of global conflict and the formula is there for a repeat of the late 1970’s surge in precious metals. This author, however, subscribes to the “this time it is different” groupthink and fear that there is a larger problem ahead which might well cause either a rapid acceleration in gold prices in dollars, or worse, a massive decline.
The price of gold moved as predicted above $2050 per ounce but stalled after an intraday attempt to break through $2150 on a closing basis.
Chart courtesy of: http://stockcharts.com/
On the positive side, the long term slope is positive, but in the short term, a double top may have formed in the last two months of 2023.
Despite this massive rally off the October lows, Dr. Copper has only now begun to validate the rally in gold or has it?
Chart courtesy of: http://stockcharts.com/
During the strong copper rally in January of 2023, believed to be part of the reflation trade, a large number of traders and analysts thought that gold would follow suit as inflation was being re-ignited for a secondary wave of price increases in late 2023. This did not happen and during the October lows for Dr. Copper, it cratered the gold bulls hopes and dreams.
Heading into 2024, copper does not appear to be building a bull case for a steady or growing global economy despite supply shortages. The collapse of the “green” trade which was supposed to keep copper demand above normal for decades was nothing more than a fallacy and copper traders recognized that with the price collapse in May of this year. Will Dr. Copper once again take its role in leading precious metals up or down in 2024? That has yet to be determined but the price action needs to exceed the January 2023 price levels to confirm a move to new all time highs in gold.
Adding to the skeptic’s point of view has been the lack of participation by “poor man’s” gold, aka, silver.
Chart courtesy of: http://stockcharts.com/
The non-confirmation for silver since 2016 seems disturbing to this soul, then again, I’ve often believed that the combination of industrial demand plus use as a monetary metal should have the price well north of $50 per ounce by now. Perhaps the physical shortages are truly because of the suppression by the Fed and Western governments who want the metal to remain affordable for industrial uses and not used again as that average man’s protection against central banks hyperinflationary nature.
As we close the book on 2023, gold is poised to either break out to historic and terrifying highs or crash as our nation collapsed into an uncontrolled deflationary death spiral. The chart above of silver from March 1, 2009 until December 29, 2023 is starkly different from the gold chart as one can see:
Chart courtesy of: http://stockcharts.com/
The double bottom in 2022 is a positive divergence from the corrective nature of the metal and thus why I think after Q1 of 2024, an era of massive illiquidity and instability, gold will be poised to finally break above the $2150 mark after some seasonal selling followed by the big move to new historic highs.
Stay tuned for tomorrow’s 2024 prediction thread for more on that subject. - Johngaltfla.com
