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We’re at the start of a pivotal year for the economy: some analysts believe that 2024 will define the decade ahead.
The US economy is at a crossroads — on the threshold of another tech revolution but still contending with a fair share of headwinds — as it enters the mid-20s. This year’s trajectory will be shaped by shifts in the post-pandemic environment, technological advancements and the impending presidential election.
There’s a lot on the line: the decisions made in 2024 about monetary policy, global politics, and AI will likely determine the United States’ economic direction for the remainder of the decade.
Wall Street is expecting the Federal Reserve to pivot toward rate cuts in the middle of an election year. There’s war in the Middle East and Europe. And though the US economy remains strong and consumers are optimistic, the icy hands of recession are still rapping at the door.
The first week of the year started off on the wrong foot: It broke a nine-week winning streak for US markets. That’s bad news: since 1950, there’s been a 69% correlation between the first five trading days and the entire year for the S&P 500, according to Dow Jones Market Data.
So, where do we go from here?
To figure that out, Gary Alexander at Navellier & Associates looked at two years with similar beginnings and very different endings: 1924 and 1974.
Both years can provide valuable lessons about how to navigate the challenges, and opportunities, facing the economy in 2024. These years show how disruptions, like the oil crisis of the 1970s and the post-World War I recovery in the 1920s, can reshape economic landscapes.
1924: The roaring 20s officially began one hundred years ago, in 1924, when Calvin Coolidge was reelected president and the Dow eventually soared about 500%.
Coolidge’s low-intervention approach to business created an environment where innovation soared — the 10 millionth Ford Model T came off the assembly line, radio broadcasts began to grow (the first presidential primary was broadcast live) and mutual funds were invented. Also notable: Charlie Munger, the late vice chairman of Berkshire Hathaway, was born on New Year’s day.
Another roaring 20s may still be ahead, says market vet and president of Yardeni Research Ed Yardeni. He writes that markets are tracking toward a year of record highs and that he expects corporate earnings to surge. In a recent note, he forecast that the S&P 500 would soar about 30% by the end of 2025, hitting the 6,000 level.
Productivity gains led by new artificial intelligence technology like ChatGPT, he said, will lead the way to another decade of innovation.
Interest rate cuts by the Fed won’t hurt the situation either, he added.
1974: If we look back 50 years to 1974, we see a different situation entirely. That’s the year President Richard Nixon resigned and the Dow tumbled about 45% to its worst bear market between the Great Depression and the Great Recession.
Inflation and economic stagnation were rampant and politicians (and the Fed) appeared unable to stop either one.
The global economy was in chaos — Alexander points out that the International Monetary Fund called an emergency meeting in Rome to figure out what to do about inflation but the conference broke up as economists argued about how to fix the problem.
The day after the conference ended, the US government reported that producer prices had risen by 18.2% in 1973. Markets tanked on the news.
Auto sales dropped by 20% and unemployment reached 7.2% by the end of the year.
In December, President Gerald Ford addressed the country, acknowledging that inflation, recession and an oil shortage had taken their toll on the economy. Alexander points out that the Dow dropped 6.6% the week of the address.
But there was a saving grace: technological innovation.
By the end of the year, the PC revolution began. In 1975, Bill Gates dropped out of Harvard to start what would later become Microsoft, now worth $2.8 trillion.
So, which way will our economy go? According to Alexander and Yardeni, that mostly depends on Big Tech and the upcoming election.
No, the SEC has not (yet) approved bitcoin ETFs
Crypto advocates gunning for approval for bitcoin ETFs by the Securities and Exchange Commission got a false alarm on Tuesday afternoon, reports my colleague Jeanne Sahadi.
The SEC’s X account posted a message saying the regulator had approved them, but SEC Chair Gary Gensler quickly published a message on his own X account indicating the agency’s account had been hacked.
“The @SECGov twitter account was compromised, and an unauthorized tweet was posted. The SEC has not approved the listing and trading of spot bitcoin exchange-traded products,” Gensler posted.
The crypto community has been eagerly awaiting (and largely expecting) the SEC to finally approve the launch of spot bitcoin ETFs, which would make bitcoin investing more accessible to Main Street investors, without requiring them to own the digital asset directly.
Bitcoin spiked higher after the initial (false) tweet, but soon plummeted. On Tuesday evening the value of the digital currency had fallen by about 2%.
Why Tropicana is ditching AI
Sure, artificial intelligence is the topic du jour, but one popular brand wants nothing to do with it.
Tropicana, the top-selling orange juice maker, is releasing limited-edition bottles that removes the letters “A” and “I” from its name (“Tropcn”) to bring attention to its natural ingredients, reports my colleague Jordan Valinsky.
The marketing stunt is meant to highlight the “fact that there is nothing artificial, and never has been anything artificial” in the brand’s orange juice, according to a press release.
Naturally, Tropicana found an appropriate place to hand out the bottles with its “new” name: CES in Las Vegas, where it’s stationing a truck this week at the event to give away the juice. It’s also hiding 100 of the bottles across the US at grocery stores owned by Kroger, including the flagship brand and others like Fry’s and Fred Meyer.
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