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2024 S&P Targets With Sam Ro, Dow All-Time Highs and the Gold Rally

The Compound and Friends

Tue Dec 19 2023



Market Forecasts for 2024:

  • Wall Street's S&P 500 price targets for 2024 range from 4200 to 5500, with the consensus falling around the median area of high four thousands or low five thousands, aligning with historical market returns.
  • Earnings forecasts are highly sensitive to both earnings multiples and actual earnings figures, leading to wide variations in price targets.

Factors Affecting Market Forecasts:

  • The Federal Reserve's less hawkish stance and early stages of inflation rates coming down have contributed to a more positive tone compared to last year.
  • Companies' adaptability to higher rates and inflation, along with absorption of significant geopolitical shocks, have positively influenced market sentiment.

Economic Outlook and Corporate Profit Margins:

  • There is a split among economists regarding whether the US will go into recession during 2024. However, expectations for continued expansion are modest even among those predicting growth.
  • It is anticipated that corporate profit margins will either remain stable or experience only minor changes despite concerns about eroding household excess savings and liquidity as well as tightening credit.

Individual Strategist Calls:

  • J.P. Morgan's lower target reflects expectations of slowing economic growth and negative corporate sentiment impacting earnings estimates early next year.
  • Mike Wilson's moderate forecast at $4500 suggests confidence in companies benefiting from operating leverage despite applying a conservative earnings multiple.
  • Bank of America's bullish outlook at $5000 highlights reduced equity risk premium, past absorption of significant geopolitical shocks, and positive macro signals driving optimism.

2024 S&P Targets with Capital Economics:

  • Capital Economics forecasts a 20% increase in the S&P 500 by the end of 2024, attributing it partly to investor enthusiasm about AI technology.
  • The impact of implementing AI technology into corporate operations is expected to become clearer in 2024, especially in financial terms.

Economic Forecasts and Market Movements:

  • Economic forecasts are subject to shocks like the COVID pandemic and unexpected persistence of high inflation, leading economists and strategists to revise their outlooks based on unexpected market movements and economic conditions.

Impact of Technology on Labor Market:

  • Implementing disruptive technologies such as AI may lead to job displacement but also creates new opportunities for leveraging such technologies effectively.
  • Historical examples like Excel replacing manual bookkeeping show that while some jobs disappear, new roles emerge, leading to increased productivity and employment opportunities.

Stock Market Outlook Variability:

  • Despite a bullish finish to the year, strategists' outlooks for the stock market vary with price targets ranging from negative 8% to positive 20%, reflecting moderate optimism.
  • The market appears more likely to experience an upward trend of 15%-20% than a downturn based on historical trends and current indicators.

All-Time Highs and Stock Market Patterns:

  • Long periods without all-time highs seem to be decreasing in intensity over time due to factors such as active central bank intervention and increased investment through retirement systems.
  • The involvement of a more activist Fed and higher reliance on stock investments could potentially dampen prolonged periods without new market highs.

Market Analysis:

  • The Dow hit an all-time high, with companies like Salesforce and Intel experiencing significant stock increases.
  • Healthcare stocks, like Walgreens, have faced a challenging year due to various market factors.

Gold Market:

  • Gold has been on the verge of a major breakout but keeps hitting resistance at the same level.
  • Despite being considered an inflation hedge, gold's price movement does not correlate directly with inflation rates.

Mergers and Acquisitions (M&A):

  • M&A activity is expected to make a comeback as the environment becomes conducive for deals.
  • Recent data shows a decline in deal value compared to previous years, signaling potential opportunities for future M&A activities.

ByteDance and Snap:

  • ByteDance, the parent company of TikTok, bought back $5 billion worth of stock at a valuation of $268 billion in the private market.
  • Snap's subscription service, Snapchat Plus, has surpassed 5 million subscribers, indicating potential growth despite past financial challenges.

Pharmaceutical Industry:

  • Pfizer's stock is predicted to rise higher than its current trading position within the next year.

Stock Analysis:

  • Discussion about a blue chip stock that has halved in value, with caution against catching falling knives and preference for waiting for price stabilization before investing.
  • Emphasizes the strategy of buying in thirds at lower prices when a blue chip stock experiences a substantial decrease in value.

Market Analysis:

  • Reflects on the resilience of a particular company despite recent challenges, comparing its struggle with competitors' success during the same period and highlighting potential areas for improvement such as meeting earnings expectations.

Investment Strategy:

  • Discusses the cyclical nature of drug companies and their periods of financial downturn, suggesting that investing during these crises can lead to eventual rewards.
  • Analyzes stock charts and ratio charts while deliberating on whether they present favorable buying opportunities or not.

Podcast Schedule Update:

  • Announces the upcoming podcast schedule, including new episodes of Animal Spirits and Ask the Compound.
  • Informs listeners about the temporary shutdown of "The Compound and Friends" for the season but assures continuity with other podcasts.