1. the supply chain issues will have worked themselves out, even PC demand is set to slump about 5% in coming 12 months heard on CNBC today
2. shipping costs will come back to historical trends
3. energy prices will soften (perhaps at somewhat elevated levels)
6. will hit some limits of government stimulus
7. USD will stay relatively flat with low interest rates (safe haven effect) but continued political infighting will prevent signifiant boost to growth via public investment
8. US growth may actually outpace China for a couple of years as China starts to show age from demographic shifts (10-15 years out it gets worse for them)
9. stocks are the hardest to predict as there has been so much obsession with the US market so momentum likely to continue, many international markets are more fairly valued but the momentum catalyst is often missing
10. Don’t want to make political predictions but if we don’t get better choices in 2024 (could be catalyst for meaningful volatility), revulsion at whoever is perceived as extreme could cause more damage
11. certain commodities (think coffee) may be the best investments (something like 1/3 of the Brazilian crop was wiped out in August and may take years to recover
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I don’t agree here:
4. housing will enter a period of 3-5 years of under performance (mean reversion) 2023-2026 it may still be 1-2% nominal increases but likely below inflation (over 3 years could drop 5% adjusted for inflation).
How is this going to happen when there are far more buyers than sellers, and construction costs are high in all the hot markets? The switch to Biden will also up residential demand via immigration and Chinese buyers feeling more welcome.
Also, don’t forget the sticky price issue, while stronger for rents, still applies for RE pricing because (1) appraisals need to catch up (2) the confirming loan limits right now are way below what they should be because they only get updated in January. In fact, right now is probably an all-time record low for the ratio between median price and conforming loan limits, which will be followed by a record large increase.
I think China will start feeling its demographic changes pretty soon, but still has at least five years of torrid 5% real GDP growth left in it before that happens. They have a highly educated and skilled workforce and increasingly first world infrastructure. Their stock market is full of scams and there’s no investor protection from fraud or government seizures, so I wouldn’t invest there however.
