This sets the table for a long commodities, short bonds kind of year

Authored by GoldFix ZH Edit

For me, there is one massive bubble waiting to burst in 2024.-Albert Edwards

Housekeeping: Something good that is easy to digest Albert Edwards is the second macro person advising bonds are not a buy for 2024 even while the rest of the street is in love with them again.

In combination with Hartnett’s recent observations as catalogued by ZH (below), Edwards also sets the table for a long commodities, short bonds kind of 2024 for our own trading bias. But that opinion is not yet set in stone.

“For those who fade Wall Street consensus (which is always wrong), this is a slam dunk: buy commodities, sell bonds” -ZeroHedge on Hartnett

Albert Edwards comes to a similar conclusion independent of Hartnett. Enjoy

Contents:

1. 2023 Macro’s Three Biggest Surprises
2. 2024 Stocks: Too Many Eggs in One Basket Still
3. 2024 Bonds: Bull Market Head Fake
4. Full Analysis: And the big surprise of 2024 will be…

1- 2023 Macro’s Three Biggest Surprises

• No US Recession as many predicted
• No China Recovery as many hoped
• ChatGPT/ AI rescued Tech-stocks from rising yields and poor earnings

Which he feels sets the table for next year by ending 2023 with Tech Valuations hovering at their richest ever with only the Y2K Tech bubble excepted. While this can continue Albert does not bet on it.

Therefore, he believes a large correction is incoming and possibly a recession on its heels. He is more confident in his Bond market call.

Here is his bottom line on Stocks and Bonds

2- 2024 Stocks: Too Many Eggs in One Basket Still

• If this bubble bursts, it will send the stock market into a large correction
• That correction becomes a big bear market if a true recession follows on its heels

3- 2024 Bonds: Bull Market Head Fake

This cyclical rally is nowhere near overdone yet, but should not be confused with good times (positively correlated with stocks) permanently returning. Bonds had moved counter to stocks for much of 2023, but recently began rallying with stocks as they did for the the whole QE era. The recent rally is being taken as a return to pre-covid times by many right now He believes the low yields won’t last long and will be merely cyclical this time

The risk here is that people confuse the cyclical rally for a return to the Goldilocks bond market where both bonds and stocks rally. They won’t

 

Full analysis continues here ...

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