Marking Time

This week started out like every other week in the world’s conflict zones and across less fortunate areas of the Global South: With desperate suffering and acute deprivation.

If you get the Daily, you read my Sunday evening summary of conditions in Gaza. It’s bad there. Famine. Disease. Mass death. And so on. It’s bad in Ukraine too. Likewise in Yemen. Parts of Africa are perpetually beset. If you live in North Korea, there’s a good chance you’re starving right now despite the presence of a divinity in Pyongyang (“My Kim, my Kim, why hast thou forsaken me?”) And if you woke up in South America dreaming of a better life in the land of Milk Duds and honey buns, you should think twice, because Libertas is a real bitch these days if your melanin’s got a tint.

Meanwhile, back at the ranch and across the Global North, the well-to-do descendants of cruel colonizers and industrialization winners woke up Monday thinking about what really matters in life: The trajectory of their investments in large corporate entities, many of “whom” owe their financial success to the perpetuation of misery in underdeveloped locales around the world, which is to say your retirement is funded by agony and destitution.

We’ve got two weeks to kill. Later this month, everyone will pause to celebrate the birth of a self-declared prophet, an annual tradition that involves lying to our children about an obese reindeer herder who runs a toy factory staffed by elves somewhere near a melting glacier.

Until then, we’re just marking time. In the blissfully detached context of rich investors in rich nations, that means playing a glorified game of pin the tail on the donkey with the index that approximates the vitality of our stakes in good ol’ American capitalism.

If you’re optimistic about corporate America in 2024, you’ll love John Stoltzfus’s year-ahead outlook. Oppenheimer’s chief investment strategist, one of 2023’s biggest bulls, sees the S&P hitting 5,200 in 2024, which he says will be “a year of transition as markets navigate what we expect will be the Fed’s pivot from a restrictive monetary policy setting to an easier stance.” Jerome Powell, Stoltzfus reckons, would like to avoid a recession in the US if he can, but the Fed’ll probably wait on the first cut until the second half of the year. Stoltzfus expects aggregate index-level profits to grow 9% to $240. So, he’s assuming a P/E multiple of almost 22x.

If you’re wondering whether anyone’s as bullish as Stoltzfus, the answer depends on whether you count Tom Lee. Some people don’t. Lee, bless his heart, is a human punchline, a reputation he can’t shake no matter how many times he’s right. He’s a rare case of someone who gets laughed at on the way to the bank. Lee also expects $240 in EPS. “We are overall positive on equities, but we believe much of the gains will come in the second half of 2024,” he said.

Meanwhile, Morgan Stanley’s Mike Wilson still sees risks to earnings over the near-term “before a broader recovery takes hold as [2024] evolves.” Q4 2023 estimates are down 5% since last quarter’s reporting season began, Wilson said Monday. For 2024, he still sees $229 in S&P EPS on “modest” margin expansion.

Who cares, right? Well, a lot of people, believe it or not. 700 S&P points (the difference between Wilson’s December 2024 SPX target and Stoltzfus’s/Lee’s) is a helluva lot of money assuming, of course, you have a helluva lot of money invested in the first place.

For what it’s worth, Wilson’s bull case for 2024 only sees the S&P rising to 5,050. As regular readers might recall, his bear case for next year is 3,850. Talk about desperate suffering and acute deprivation.


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7 thoughts on “Marking Time

  1. This piece seems to reflect the dark place you are in right now. I get it, this is a crappy time, the outlook is bleak. Have you ever noticed that every year these prognostications are always somewhere along the lines of “next year will be good for investments”? I have come to accept that it is all a sales pitch. As a fund manager you need people to feel positive about investing so they will continue to give you money.

    1. I’m not in a “dark place.” I’m in a very good place. That’s the whole point, my friend. The better we do, the more important it is to keep perspective.

      1. Then perhaps it is me who is projecting on to you. Perspective is important but can also be psychologically detrimental. If you are benefited by the poor, starving, and dying then anyone with humanity naturally feels some guilt that they are being benefited by those who are being destroyed. There is little that you can do about it, so then you are left with guilt over a problem that you can’t solve. You are the beneficiary solely by the fact that you were born here and not there. Call it beneficiary’s guilt (a form of survivors guilt?) but it’s the reality. There have always been winners and losers in the human saga and by the fact that humans are not satisfied with balance, there always will be.

  2. I could barely get through your Sunday evening Daily- the situation is beyond horrific. Honestly, I can’t think of any overseas situations where US involvement was unequivocally a good thing.
    Maybe it is time for the US to adopt the Swiss approach to foreign policy? Or restrict our efforts to help rebuild post conflict.

    1. The US officially dates back to 1784. Since that time, as near as I can determine, we have never been on the right side with our foreign policy. We keep backing the wrong team, except maybe in WWII, but even that that was a close call initially. We think we the responsibility to support the world like still having kids living in our proverbial basement. We should work with people but we don’t have to pay their wages. We do none of this very well. Neutrality and leadership is better. Part of the problem of the last 75 years is that we need a constant supply of oil and the guys who have it, besides us, like our killing machines. [For those who remember such things, we are Br’er Rabbit getting tangled up with the Tar Baby. The more he struggled the more tangled he got. BTW, that’s the same story redone in Fargo.]

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