Is it just me that finds Christmas and the Holidays to be overly stressy? They will be over too quick, and we’ll all be back as confused as ever. Here are some thoughts and predictions for 2024. The one thing I guarantee: The World is Changing.

Markets are poised for the strongest year finish in decades, anticipating early rate cuts and upside in 2024. Meanwhile consumers wrestle with wages falling behind costs, while businesses struggle with debt. The gap between expectations and reality is simply too wide – and will become increasingly apparent.

The Fed is going soft, while the ECB and The Bank remain tough on rates and inflation. The market is watching the numbers, but the critical element is the need to normalise real interest rates to restore the functionality of the market economy.

Expectations of early interest rate cuts are high, especially as recession signals are set to rise through Q1 2024. Will Central Banks stay the course and normalise interest rates, or will be take the easy option of further low interest rate distortion?

Bond Markets are a wonderful thing to behold in full rally mode, but expectations of a swift return to lower rates depend on Central Banks playing ball, and nothing else changing. Experience shows things change quickly re inflation, rates and markets!

 The US economy posted strong growth in the face of monetary headwinds and financial adversity, demonstrating its unique strengths. But how sustainable is it in the face of debt, higher rates and political crisis?

Nvidia confirms the AI everything bubble! FOMO means everyone will play catch up! There is a growing divergence likely as inflation, growth and interest rates spells deep trouble for Europe and the ECB, while the USA recovers and the UK muddles through.

Are current markets turning into a bad dream? There are so many reasons to be fearful, but giving into our terrors shows how driven by bias we are. A Hornet in the Bedroom Moment can make everything look bad. The reality is… probably not as bad as it looks!

Everyone seems worried about the sustainability of Sovereign Bonds in terms of rising rates, interest burdens, debt quantum, and who will keep buying. Relax. Bonds have weathered worse. But there are ways to use Sovereign debt better.  

Many think Markets are set fair for the second half of 2023 – but what if a mighty depression is brewing out there in the ocean of corporate debt? I am looking at the glass (barometer for the non-nautical) falling and at the CLO market in particular. There may be a storm brewing.