big mixed call here.
Got the fast gdp growth correct, and got higher inflation than expected correct...and the 10 year is at 4.6% and rising...but not 5.5%. Bonds only made 1.5% this year, so he was generally correct.
And of course it was not a good year for stock picking. It never is.
Jim Bianco
@biancoresearch
Me on CNBC making the case for higher 10-year yields
All my videos are here
Below are the notes I sent along ....
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I'm still a bond bear. I still have my target of 5.50% 10-year in 2024.
I'm in the "no landing" camp. That is no recession or even a soft landing but continued expansion. (as an aide, I've been critical of the soft-landing forecasts as they don't have an accepted definition, and by some criteria, it can be argued there has never been a soft-landing before).
So, I think there will be 2+% real GDP growth in 2024.
I'm also in the "sticky" inflation camp that bottoms at 3+% in the long run, not 2% (it only gets to 2% in a full-blown hard landing or recession, which I do not see).
For both above, I've argued the cycle changed in 2020. The labor market is very different (remote work) and more transactional. That means employees are more willing to quit (or strike) as they are fearless in finding another job. This confidence allows them to keep spending.
So 2+ real GDP growth and 3+% inflation = 5+% nominal GDP, which is how I get to 5.50% 10-year in 2024.
A word about what this means for risk assets, like stocks: they will see the headwind of a viable alternative ("TINA" died in 2020). This was the case in 2023 with everything but the "Mag 7" stocks struggling to beat cash ... for the second year in a row.
Dr. Jeremy Siegel has a new edition of his book "Stocks for the Long Run" this year. In summary, the long-term potential of the stock market is now 8%. If investors can continue to get 5+% from the bond market, why take the extra risk of 3%?
On this front, the era of buying indices is now over. Peter Lynch can come out of retirement as we are on the road to transitioning back to a stock-picking environment.