A couple weeks ago, Sandor and I attended the 2023 World Economic Conference. This was my 9th consecutive conference, and the 4th via virtual attendance. Sandor took excellent notes as usual, helping to inform this summary.
If I could distill the tone of this year’s event, it would be that there are definitely major domestic and geopolitical/military events on the horizon…but the most feared events are a few years away. There are short and long-term concerns for equity markets, but the medium term provides some very significant opportunities – especially in North America.
Frankly, we were pleasantly surprised, especially given Marty’s accuracy and long-sightedness on major events and their development, e.g. war in Ukraine, oil prices, elections, gold prices, the continued bull market in US equities. Keep in mind, there are still some difficult world and domestic events ahead.
As Marty often says, if you can see the worst major events coming, you can prepare for them, protect against the worst potential outcomes, and have dry powder to take advantage of major sales on quality assets. As with difficult personal life events, survival IS the victory.
Out of respect for Marty’s proprietary Economic Confidence Model (ECM) and Socrates systems, I will – as always – provide broader commentary to our clients and newsletter readers in bullet-point form below. We do share more details with our Portfolio Managers, as their real-time decisions have the most direct impact on clients’ portfolios.
Near-term and longer-term concerns create medium-term opportunities:
- Equity market volatility in Q1 2024, likely beginning in early January. This will spook many investors (including professionals) but this is a Bear Trap. Thus, this period will likely be the last big shorter-term opportunity to get fully long in equity portfolios. An upside “slingshot move” looks very possible for North American markets, but Europe continues to look much weaker. No surprise there.
- The global “trophy” companies will continue to be attractive to international investors who continue to direct their capital to North America “for both safety and opportunity” – as my friend Victor Adair often says.
- Gold appears to be strong through January, which is consistent with typical seasonality
- Oil doesn’t appear to be ready to close above $99.50 USD by year end, which means that the $150 USD maximum target is still further out. In the next few months, there’s still seasonal strength to lean on.
- Civil unrest in the US is Marty’s biggest near-term concern. As he’s said publicly, the next key date on the ECM is May 7/8, 2024. He mused that this will likely involve Trump’s legal challenges and the effects on his very loyal MAGA voter base. Regardless of who is declared the winner, the losing side will not accept the result. Hopefully there’s no major domestic terror attack that gets used as the pre-text to bring back mail-in ballots, or in a worst case scenario to delay or suspend their elections.
- In a subsequent public blog post, a reader pointed out that May 8th is also the date of the inauguration of the Russian Federation. This is obviously troubling, but something else of significance could also occur on those dates. Not even Marty knows in advance what the important event will actually be…just that the date is significant.
- In the Middle East, Türkiye is the most important player to watch. As Col Douglas MacGregor has often stated, Turkiye has a massive military, can mobilize reservists very quickly, have excellent equipment, and their soldiers are fierce and very well-trained. They can also drive from their southern border to Israel’s northern border in under 12 hours. President Erdogan is also the leader of the Muslim Brotherhood in the Middle East and North America, so he has immense influence. The longer the IDF response to October 7th continues in Gaza, the greater the potential for other Muslim nations to join Turkiye in a serious regional war. Any way you look at this the humanitarian tragedy looks like it will likely continue.
- The bull market in food commodities looks like it still has plenty of room and time to continue. Supply shortages, military blockades and international sanctions will exacerbate this trend.
- The biggest long-term concern continues to be a severe Sovereign Debt Crisis. This is an area where Normalcy Bias and Availability Bias cloud the outlook of even the most seasoned market veterans. Europe will crater first, Japan next…and in the meantime this is supportive of both the US Treasury markets, relative to Eurobonds and Japanese Government Bonds (JGBs). This will also continue to support the $USD as the world’s reserve currency for another few years at least.
- Canada will once again benefit from our proximity to the US, and our resource-rich land. This is yet another reason to be grateful for living here.
- The International War models are ramping up and currently look to be peaking in 2027 (Taiwan) and 2028 broader conflicts involving more than two global military powers at a time. The time to take cover financially will come, but it’s still further out on the horizon. It’s inevitable, but at least we can protect ourselves.
In summary, the world as we know it here in North America is not ending, certainly not yet. Unfortunately for millions of innocent civilians living in the current and future war-torn countries there is deadly military conflict rising between now and 2028.
Once again, we’re looking forward to presenting at the World Outlook Financial Conference in Vancouver on February 2 and 3, 2024. We’ll be presenting our then current best ideas distilled from the careful research and wisdom of the Money Talks analysts.
Patience and Discipline are accretive to your health, wealth and happiness…so focus on these.
Cheers,
Andrew H. Ruhland, CFP
Founder, Integrated Wealth Management Inc.
