by Bryan Perry

January 17, 2024

The market stage is set for what looks to be a very bumpy ride ahead, as a series of fluid situations are ramping towards inflection points that could bring about some abrupt fallout and ramifications regarding the U.S. economy, in the midst of a key presidential election year, plus new trends within our society.

We’re only halfway through January, but there is already plenty to chew on for the year ahead.

First, the widening out of the war in the Middle East has become more interesting after some 130 attacks on U.S. targets finally generated a response. Houthi attacks on shipping in the Red Sea risked reigniting global supply chain disruptions, so the Biden administration finally responded against Houthi rebels in Yemen. One can surmise that the timing of the U.S. response at the beginning of an election year plays to the historical pattern that no U.S. incumbent president has ever lost an election during an overseas war.


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Over in China this past weekend, voters in Taiwan elected the Democratic Progressive Party (DPP) to another four years, seizing victory in the national election. The DPP won 40% of the votes over two rival parties. The win marks a third term for the DPP and stokes tensions between mainland China and the island nation as to whether the use of military force by China may be the next step to gain Beijing’s desired reunification and control of Taiwan – and what the U.S. response would be in such a scenario.

WSJ Picture

In a third potential war front, the appetite for continued financial support for Ukraine is waning. The latest survey by The Associated Press and the National Opinion Research Center showed only 48% of those interviewed supported providing more weapons to Kyiv, 29% opposed it and 22% had no opinion.

In a similar survey last May, 60% of Americans supported supplying weapons to Ukraine, so there is a growing sentiment that the U.S. has done its part and that Europe and NATO need to up their role. At this point, Russia controls Crimea and the Donbas region, and both Russia and Ukraine suffer troop attrition.

In the domestic political race, the U.S. Supreme Court says it will hear a historic case to determine whether Donald Trump can run for president. The justices agreed to take on Mr. Trump’s appeal against a decision by Colorado to remove him from that state’s 2024 ballot. The case will be heard in February and the ruling will apply nationwide. Mr. Trump is currently in the midst of three separate trails in New York, Washington D.C. and Atlanta over financial allegations, the events of January 6, and 2020 election interference allegations.

The outcomes of all three trials are up in the air, but odds are that the Supreme Court trial will decide in Trump’s favor. If so, we’ll likely see another close presidential election in November. According to The Hill/Decision Desk HQ’s national polling average, Trump and Biden remain neck-and-neck in a hypothetical head-to-head general election rematch. Trump has 44.3 percent of support, while Biden has 43.1 percent.


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A serious situation that is getting less press is that the federal debt continues to soar at a pace that has the potential to bring real downside pressure to the dollar and upside pressure to the long end of the yield curve if buyers demand more yield for the rising risks of creditworthiness. Reuters said last Thursday:

“The U.S. federal government posted a December deficit of $129 billion, up $44 billion or 52% from a year earlier as outlays rose while receipts fell from December 2022 levels that were swelled by pandemic-deferred tax payments, the U.S. Treasury Department said on Thursday. The Treasury said that outlays for December rose 3% to $559 billion, a December record, partly as a result of higher Social Security outlays and interest on the public debt. Receipts for the month fell 6% to $429 billion.” – Reuters Jan. 11, 2024

China’s economy is likely facing years of stagnation unless major market reforms occur, thereby weighing heavily on world output. China is currently experiencing a property crisis, weak consumer spending, and high youth unemployment. “The 2024 challenge for the Chinese economy will not be GDP growth — that will likely be above 4.5%,” said Derek Scissors, senior fellow at the American Enterprise Institute. “The challenge will be that the only direction from there is down.”

Logan Wright, director of China markets research at Rhodium Group, agreed, saying: “The slowdown in China’s economy is structural, caused by the end of an unprecedented expansion in credit and investment over the past decade.” The country’s financial system simply won’t be able to generate the same levels of credit growth that it has in previous years, he said, therefore Beijing will have far less control over the direction of its economy than it has in the past. The Shanghai Composite Index reflects this economic deterioration, as it is about to test pandemic lows.


Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

Thankfully, the U.S. economy and U.S. stock market are on more solid footing, with the CPI running at 3.4% and trending lower, generating expected interest rate cuts early this year. The CME FedWatch Tool has a 77% probability of a quarter-point cut taking place at the March 20 FOMC meeting following last week’s release of the CPI and PPI data. The employment market has shown itself to be resilient, with the focus of investor attention squarely on fourth quarter earnings season, which is just getting underway.

At this point, only 6% of S&P 500 companies have reported fourth quarter results. Of those companies, 76% have reported positive EPS surprise and 55% have reported positive revenue surprises (source: The big money center banks failed to impress when they reported last Friday, but the market took that in stride. Still, investors should brace for a choppy market going forward, impacted by the above-noted situations and a slowing domestic economy, where forecasting future growth is elusive.

The bullish momentum of the last 10 weeks will be tested when the blue-chip technology companies post their numbers and guidance. They bore the torch in 2023, and in my view, will do so again in 2024.

All content above represents the opinion of Bryan Perry of Navellier & Associates, Inc.

Please see important disclosures below.

Also In This Issue

A Look Ahead by Louis Navellier
Why the Fed Follows the PCE, not the CPI or PPI

Income Mail by Bryan Perry
Bracing For More Volatility Ahead

Growth Mail by Gary Alexander
Why the Fed Lost Over $116 Billion in 2023

Global Mail by Ivan Martchev
U.S. M2 Money Supply is Still Shrinking

Sector Spotlight by Jason Bodner
How Long Can This Market Stay Overbought?

View Full Archive
Read Past Issues Here

About The Author

Bryan Perry

Bryan Perry

Bryan Perry is a Senior Director with Navellier Private Client Group, advising and facilitating high net worth investors in the pursuit of their financial goals.

Bryan’s financial services career spanning the past three decades includes over 20 years of wealth management experience with Wall Street firms that include Bear Stearns, Lehman Brothers and Paine Webber, working with both retail and institutional clients. Bryan earned a B.A. in Political Science from Virginia Polytechnic Institute & State University and currently holds a Series 65 license. All content of “Income Mail” represents the opinion of Bryan Perry

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