Skip to main content

Will "Goldilocks" economy take S&P to 5K?

Markets are having a record breaking dream run of 7 weeks of positive returns since Nov CPI report came out. Last week's Fed meeting confirmed already well known fact that interest rates have peaked and there are at least 3 rate cuts coming in 2024. Economy feels like "Goldilocks" economy - not too hot, not too cold...it's just perfect the way Goldilocks would have liked. Let's look at some of the key economic indicators.

  • Unemployment dipped to 3.7% but wage growth has slowed down. Good
  • Inflation dipped to 3.1% and all indicators pointing to further reduction. In fact if recent declining hosing rents are taken into account, the inflation may already be closer to 2.5%. Good
  • Earnings were better than expected. Good
  • Q3 GDP report was hot but Oct/Nov trends show that there is slowdown coming but enough to cause recession. Good
  • Holiday shopping season had good start. Good
  • Interest rates coming down. Fed is indicating 3 rate cuts. Good
  • Small caps have finally started catching up with their big brothers (still over 10% gap in YTD performance). Good
  • REITs (especially commercial ones like SLG, VNO, BDN, BXP) etc may have dodged the bullet of "higher for longer" interest rates and will be able to refinance their mortgages and avoid bankruptcies. No wonder these stocks have doubled in last few months despite all the "gloom and doom" talk by pundits due to workers not coming to offices. Good
  • AI momentum continuing - AMD and INTC trying to join the AI gold rush with their recent announcements. Good
  • While China is still cold, policy makers have started talking about market friendly policy making. Chinese markets have not gone anywhere and Chinese web companies (like BABA, DIDI and others) are trading at fraction of their American counterparts. Would Chinese web companies turn around in 2024 the way magnificent 7 did in 2023? If you think it could happen, one way to invest would be thru ETF KWEB instead of individual Chinese stocks - Neutral
All of these factors feel like economy is in Goldilocks Equilibrium - not too hot and not too cold. These factors along with soft landing could take S&P to 5000 in 2024.

Indian markets are on a roll..especially after state elections in which ruling party BJP won 3 out of 5 states when expectations were 1. That bodes very well for Narendra Modi coming to power in May 2024 for record breaking third term. Around same time, Adani group got clearance from Indian courts and Americans approving loans (dis-crediting report from short seller Hindenburg) That caused tremendous rally in all of Adani group stocks. While Adani, Ambani and Indian tech stocks are well known to the investing world, there are many hidden gems in Indian markets...Here are couple of examples.

If you folks are fan of single malts and tried recent crop of Indian single malts like Rampur and Indri  (Indri Diwali Collector's Edition 2023 has been awarded as the best whisky in the world at the Whiskies of the World Awards), check out stocks of companies which make these Whiskies.

Rampur is made by Radicco Khaitan - it's stock went from Rs 85 to over 1600 (almost 1800%) in 8 years since Rampur was launched.

Indri is made by Piccadilly Distilleries (subsidiary of Piccadilly Agro Industries) - it was launched in 2021 and stock of its maker has gone from Rs 12 to 220 (almost 1000% in 3 years)

And given the reception of these whiskies and potential of expansion, they may be just getting started....

(disclaimer - I wish I had done this research when I saw Rampur in Bay Area Costco and came to know about Indri few months back. I don't have any investments in these two companies)

There are many similarities in family controlled Indian companies and founder run American companies - but that's for another blog in 2024.

If you are traveling during holidays, safe travels to all of you.

Happy Holidays....

/Shyam




Comments

Popular posts from this blog

2024: The year of.....

Wishing you a joyful New Year filled with laughter, love, and unforgettable moments, surrounded by cherished family and friends. May the 2024 bring similar gains as in 2023! I had great 2 weeks break with travels to Turkey with family and then solo trip to Palm Springs. Both places are amazing and definitely worth a visit if you get chance. Talking about gains in 2023 - Here is recap of 2023.. Inflation fallen below 4% and heading towards 3% Unemployment firmly below 4% Real wages growing above 4% GDP growth around 3% Markets: S&P notching one of the best year with 24% gains while Nasdaq doing even better with 40% gains thanks to Magnificent-7 (or TAMMANNA) many of which had triple digit gains My personal recommendations did exceptionally well - many of which were up by high double digits (e.g. INTC) and some of them had triple digit gains (e.g. META) All in all - 2023 was great year.  As calendar changed to 2024, what's in store for new year? This is election year in many coun

Roaring 20s....Again!

About 2 years back coming out of COVID pandemic, I wrote blog titled " New Roarin' 20s.."  It covered what happened in 1920s and what are the factors now which would trigger new roaring 20s. Do check out the blog...almost all factors are valid even now. 2022 went sideways due to inflation pressures which triggered historical steep rate hikes by central banks which led to tech companies taking more measured approach and laying off 200,000 employees....all of that changed in Nov'22 when ChatGPT was launched...even though I had mentioned AI/ML as one of the factor in my previous blog, ChatGPT really captured the imagination of the world and changed the outlook of AI instantly similar to what Netscape did with the Internet and iPhone did with the mobile. The singular concept of "Language is the Interface" made AI accessible instantly to billions of normal people....And now without mentioning AI, no talk starts or ends in tech world..and despite onsite of most-aw

It was not meant to be...

I imagined today' day (Nov 19, 2023) little differently than what it turned out to be..had a watch gathering at my place with few friends for India vs Aus ICC Cricket World Cup Final. Both teams deserved to be in the final - India winning all games in this tournament and Aus winning last 8 games after initially losing 2 games at start of tournament. The match was being played at the biggest stadium in the world (over 132,000 capacity) and over billion people tuning in...maybe most watched single sports event ever. After Australia won the toss, they choose to field (that's what most likely India wanted). India started well but then wickets kept dropping and India ended with total of 240 all out. That's when all of us knew that the dream of winning third world cup is over...despite one of the best bowling squad India ever had....The score was just not enough even for the best bowling to defend against one of the most professional and mentally strong team....No wonder Australi