12 Days of Christmas Wishes: Markets with Megan Special Holiday Edition! | Episode 080 | 12-04-2023

Season's greetings! In today's festive episode of Markets with Megan, Chief Investment Officer Megan Horneman transforms the classic "12 Days of Christmas" into 12 unique wishes for 2024. Megan wishes for everything from hoping for one million more homes on the market to dreams of a 2% inflation target and envisioning a 6% mortgage rate. Whether it's a desire for an equity rally beyond the current dominant companies or a wish for 12 months with no rate hikes by the Federal Reserve, Megan is embracing the holiday spirit with optimism and good cheer. While acknowledging the likelihood that some wishes are extremely unlikely, it's all in the joy of the season. Reach out to podcast at Verdence dot com for questions, insights, and economic updates. Wishing you a joyful and prosperous holiday season!

Hello, this is Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors. We're coming to you today with our regular segment of Markets with Megan, and we're going to do something a little bit different today. It's the beginning of December. The holiday season is quickly approaching, so what we wanted to do was take the song the 12 Days of Christmas and turn it into 12 different wishes that we have for 2024. This isn't our market outlook by any means. In fact, most of these are highly unlikely, but what is it hurt to wish for in this holiday season? So on the first day of Christmas, we're hoping for one million more homes to come on the market. This would bring that really low inventory of homes that are out there. That would bring that up to closer to the historical average. For the second day of Christmas, wouldn't it be nice to see that 2% inflation target that the Fed's looking for? Probably not going to happen in 2024, but it doesn't hurt to wish. For the third day of Christmas, we would love to see that deficit as a percent of GDP fall back down to about 3%, which is around the historical average. It would be basically about half of what it is right now, though. So, again, wishful thinking, but wouldn't that be nice. The fourth day of Christmas it would be nice to see the default rate the speculative grade default rate for corporate bonds, to rise to about 4% instead of the 5% that they're expecting next year. On the fifth day of Christmas I mean, nobody can deny five golden rings at a record high that we saw last week at $2,072 an ounce. On the sixth day of Christmas, it would be great to see a 6% mortgage rate and we've seen mortgage rates come down to some degree here lately, but 6% would help someone with a $350,000 mortgage save about $300 a month. On the seventh day of Christmas it would be really nice to see the rally in 2024, an equity rally spread beyond those magnificent seven companies that we've seen drive this rally this year. And then on the eighth day of Christmas we've gotten some moderation and gasoline prices in recent weeks, but it would be really nice to see gas prices drop about 80 cents a gallon and that would bring us to that historical average we saw in the five years leading up to the pandemic.

On the ninth day of Christmas you know office real estate is in distress. Here. We'd like to see maybe 900 million more square feet of office space occupied in the US. We've got about 20% of the US office space is vacant and this is putting some stress on the economy. So we'd love to see about 900 more million square feet of office space to be leased. On the tenth day of Christmas, we would like to see a 10% rally in the MSCI All Country World Index that's outside of the US. This would help a well-diversified portfolio do well in 2024.

On the eleventh day of Christmas, we're going to hope for 11% earnings growth for the S&P 500. It's what analysts expect right now. We think it's going to be very challenging to get there, but 11% earnings growth would be great for equity returns for next year. And then on the twelfth day of Christmas. You know we can't say that this is something that for sure can happen, but would be nice to see 12 months of no rate hikes by the Federal Reserve in 2024. So again, this was just having some fun with the traditional song 12 Days of Christmas. Some things we have for a wish list and we understand some of these are not likely in 2024, but again it's in the spirit of the season. It doesn't hurt to take a wish on some of these things. That's all we have and we will be back next week. We'll be in an offsite this week, so we'll be back with more economic and podcasts next week. Thank you so much. If you have any questions or comments, please feel free to reach out to podcast at Verdence dot com. Thank you.