Here are some markets, economy and stock predictions for 2024, including what would be a most unexpected outcome for the U.S. economy. First, a reminder: “The markets and the economy are not the same.”
1. AI continues to capture the world’s imagination: The biggest corporations start using artificial intelligence for real-world business purposes, including supply-chain management, distribution improvements and customer service interactions. Even some TV shows and big-budget movies could be made using generative AI.
That said, many smaller AI stocks will get crushed and end the year down 90% or more, after failing to deliver on overhyped promises they’ve made about how they will use AI to generate growth. This group includes C3.ai AI, -0.95%, Soundhound.ai SOUN, -10.95%, Upstart Holdings UPST, -1.91% and Palantir Technologies PLTR, -1.68%.
2. U.S. economy stumbles: The U.S. economy grows about 2% in the first half of 2024 but gets ugly by year-end, contracting 2% in the fourth quarter of 2024.
3. Tech on the move — literally: At least five tech companies, each valued at more than $ 50 billion, announce their intentions to move their headquarters to Texas from California (like Tesla has).
4. ChatGPT drama: Sam Altman gets fired from ChatGPT again and this time it sticks. Microsoft has difficulty monetizing its ChatGPT partnership and its stock finishes 2024 down 15% or more.
5. The Fed won’t cut rates: Inflation will spend most of the year around 3%-4% causing much angst and eventually fear in the broader markets. The same consensus that was so bearish heading into 2023 is now wildly bullish heading into 2024. Obviously, 2023’s soaring megacap tech rally brings out the bulls.
6. Nasdaq is flat; large-caps lose: The Nasdaq 100 QQQ ) should be lackluster. The best-performing megacap tech stock will be Tesla TSLA, -2.28%, which will be down 10% or more in the first half but will be up 30-40% or more in the second half. The second-best megacap tech stock will be Amazon.com AMZN, +1.52%, up 20% for the year, followed by Alphabet GOOGL, +1.52%, up 15% or so.
Meanwhile, Apple stock AAPL, -0.23% will be lose 5% and the worst megacap tech stock will be a toss-up between Microsoft MSFT, +0.29% and Broadcom AVGO, +0.71%, each being down 15% or more in 2024. Small-caps shine as the Russell 2000 IWM ) gains 10% for the year while the S&P 500 SPX slips 5% and the Dow Jones Industrial Average DJIA ) posts a 10% yearly loss.
7. Bitcoin pulls back: Bitcoin BTCUSD, +0.96% pulls back 15-20% before its “halving” event happens in April, which allows bitcoin and other cryptocurrencies to rally into the event only to drop 20-30% in the two or three months after the halving. Bitcoin stabilizes in the high $ 30,000s (bottoming around $ 36,000) this summer and finishes 2024 at $ 42,733 or so. Ethereum ends the year down more than 20%. Recent highflying cryptos like Bonk and Near finish 2024 down 50% or more, while Dogecoin DOGEUSD, +1.09% doubles (Call it the “Elon effect” — I would have expected Elon Musk to give up on Dogecoin by now, but he’s still bulling it).
Over at the SEC, Chair Gary Gensler leaves the regulatory agency this summer and the next SEC enforcement chief comes in and actually does his/her job. The government steps up prosecution of the founders of thousands of silly, stupid and/or fraudulent cryptocurrency tokens that have been illegally pawned off on the public in the past five years. Coinbase Global COIN, -4.66% gets its comeuppance as the company settles with the SEC for $ 7.2 billion and Brian Armstrong has to give up his job as CEO.
Read: SEC says its X account was compromised, and it has not approved bitcoin ETFs
8. Oil is not well: Oil becomes one of the most volatile sectors in the market in 2024, spending the year trading between $ 55 and $ 90 a barrel and finishing the year at $ 77.
9. Good as gold: Gold GC00, -0.07% becomes one of the least volatile sectors in the market in 2024, spending the year trading between $ 1800 and $ 2200 and finishing the year at $ 2047.
10. EV short-circuits: GM GM, -0.44%, Ford Motor F, -1.09% and the other legacy automakers all but throw in the towel on their heretofore ballyhooed EV strategies as buyers continue to avoid their crappy software and horrible charging networks. GM writes down more than $ 5 billion on its EV business and the stock ends the year at less than $ 20 a share.
Cody Willard is founder of 10,000 Days Fund Capital Management and runs the 10,000 Days Fund, a hedge fund. At the time of publication, Willard and/or the 10,000 Days hedge fund were net long META, GOOG, AMZN, TSLA and BITO, and net short AI, UPST, PLTR, MSFT, QQQ, AVGO, IWM, SPY, DIA, COIN and GM.
More: These Big Tech stocks look to grab the biggest AI market share in 2024
Also read: Why stock-market bulls should be careful what they wish for on Fed rate cuts