2023 was a tumultuous year for the economy and the world at large. With ongoing and escalating geopolitical conflicts, a banking crisis, inflation, volatility, chaos in Congress, and more, there's a lot to sift through. Yahoo Finance anchors Brad Smith and Brian Sozzi take a look back at the year, their biggest takeaways, and dive deep into the concept of 'Hopeium,' driven by generative AI and the Magnificent Seven stocks.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

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BRAD SMITH: Reflecting on three areas that hopium sprung eternal. This year hope for a Fed pivot, hope for shelter cost slippage, and hopes that have been built on the there's a generative AI for that awakening. Fourth quarter 2022 was the first time I'd ever heard the term hopium pipe during a jobs day conversation with RSM's Joe Brusuelas at the time remarking on investors jonesing for a pause, a pivot, or just an idea of a break. And hitting the hopium pipe.

Now seeing the data that best supported bullish animal spirits, which was the case for the beginning of this year 2023 into late July, certainly came to fruition. So as we ultimately think about what is set to come here, hopium for a Fed rate cut, hopium for 2024 rate cuts, and these crystal ball expectations vary.

But what is starting to becoming a reality is the pivot. Fast-forward, speaking with Yahoo Finance in December, Nick Timiraos makes it clear that any rate cuts would be dependent on inflation continuing to decline. He says it does seem like the FOMC could be moving ahead of the discussions around when to cut rates after January if inflation's continuing to come down.

So what's the next thing? Hopium that shelter costs will improve, still pesky as part of inflation. US housing market plagued by mortgage rates, high mortgage rates, low inventory in 2023.

Powell in the meeting at December, after picking up somewhat over the summer activity in the housing sector has flattened, remains well below the levels of a year ago, reflecting higher mortgage rates.

Meredith Whitney says two things-- job-based population migration, as well as the silver tsunami are the trends that are expected to start in the latter part of 2024 and continue into the next several years, and then hopefully bringing more people back into the home-buying market.

And then finally here, let's just jump to the hopium that generative AI is a silver bullet. Seven stocks driving the material gains of the S&P 500 as benefits from generative AI that have been touted by technology executives are hyper-charged productivity, accelerated intelligence, and fattened margins all continue to be thrown out there.