by Gary Alexander

January 9, 2024

OK, the party’s over. Week #1 of 2024 is in the books, and three major hangovers hit us, all at once:

#1) The stock market declined! What? During the traditional payoff week of the Santa Claus Rally?

#2) In a major New Year’s address, China’s leader-for-life Xi Jinping seemed to saber-rattle Taiwan.

#3) U.S. federal public debt topped $34 trillion, on the way to maybe $36 trillion by the end of this year.

Let’s take them one at a time, from the temporal (even trivial) short-term market fluctuation to two major long-term threats which reflect on two of my two major themes in these columns: (1) Who will rule the 21st Century – China or the U.S.? and (2) Will we see a new Roaring 20s or Stagnant 70s (see last week).

#1) Don’t Fret a Flat First Week (or even Quarter) in Stocks

In our regular editorial conference call on Friday morning, our associate Jason Bodner shared his research on Presidential election years since 1980 (covered in “Sector Spotlight” this week). It turns out that the S&P 500 averages a 1.5% decline in first quarters in years divided by 4 since 1980, including small declines in both of Ronald Reagan’s winning years (1980 and 1984), and huge declines in 2008 and 2020 (mostly due to the Great Financial Crisis of 2008 and COVID in March 2020). However, the rest of each presidential election year averaged over +8%, with nine out of 11 years rising (all but 2000 and 2008).

Part of this early election-year market malaise, I would say, is that January to March is dominated by the state primary votes, back-loaded into March, so we don’t really know for certain whom the major Parties will likely nominate until at least 50% of the states chime in – by Tuesday, March 19 this year.

In case you didn’t see it, here is Jason’s chart of the election year S&P 500 performances since 1980:


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

Obviously, the Great Financial Crisis of 2008 brings the average down.  If you take that outlier off the table, we’d equal the long-term average of +10.2% for the full year, but the first quarter is still -0.65%.

Now, on to two more important challenges for 2024, starting with big “hints” dropped during Week #1:

#2: Will China Start “World War 4” This Year?

Congress is already debating American support for Ukraine vs. Russia and Israel vs. Hamas, with the likelihood that we may have to help Guyana against forceful expropriation of most of their land by Venezuela, and now comes Xi (who must be obeyed) Jinping, threatening a fourth world war this year.

Although the Chinese New Year doesn’t arrive until February, Taiwan holds an election on January 13, so Xi gave a New Year’s speech to tell the world that, “The complete reunification with the motherland is an inevitable course of development, is righteous and what the people want. The motherland must and will be reunified. … [We must] resolutely prevent anyone from separating Taiwan from China in any way.”

Translated from “Inside China-speak,” Xi is apparently warning the Taiwanese voters not to vote for the leading candidate from the ruling Democratic Progressive Party (DPP), Vice President Lai Ching-te, who is against any union with China and is currently leading the polls against various pro-China candidates.

Most pundits doubt that China will invade Taiwan due to its weak economy, its reliance on trade and the likely global backlash against them, but perhaps China’s erosion of trade, its military build-up and its army of unemployed young males (a result of their 35 year “one child” policy, resulting in the abortion of unborn girls in favor of males) points toward military solutions over trade as a focus for China’s future.

These three Economist cover essays from mid-2023 point to a China in crisis, with their millions of young Generation Z baristas foregoing dull factory jobs for tattoos and self-expression, or no job at all.


The first article (“Peak China”), above, points to China’s disappearing population, with only 1.2 children per woman (2.1 is the replacement rate), seven years after the end of China’s “one child” policy, with much lower birth rates in China’s industrial centers. There are far too few young workers to support social programs for the elderly. China’s “disillusioned youth” (second article) don’t want to endure any factory jobs. “I can’t sit on an assembly line,” says Zhang, a 20-something barista with dyed red hair at a local tea shop. But, like old folks everywhere, Xi and his fellow elders, who lived through the Cultural Revolution (1966-76), say these youngsters need to “toughen up,” or in Xi’s words, “work hard and endure hardship.”

China’s youth aren’t buying it, any more than American youth are buying it, so maybe China’s military could become Xi’s solution for creating a work ethic. Xi is building a world-class navy and armed forces. and that’s where our third challenge comes in, as America supports many other armed forces not our own.

#3: Can We Expand Our Debt to Fund a Third (or Fourth) Foreign War in 2024?

On January 3, CNN reported, America’s federal debt crossed $34 trillion. I remember the brouhaha that accompanied our first $1 trillion in debt back in the early 1980s. We thought that signified the end of the world, but there were no major articles or horror stories about last week’s $34 trillion debt benchmark.

In 2011, the S&P 500 tanked by almost 20% when Congress couldn’t pass a debt ceiling and downgraded U.S. debt on August 5, 2011. Last year, both Fitch and Moody’s downgraded the American government’s credit ratings, and hardly anyone noticed. We have sent over $100 billion to Ukraine and that war has become a stalemate – call it a quagmire, if you wish – and now we are supporting Israel, with perhaps aid to Guyana in the wings. War in Taiwan would be a far more expensive military support effort.

A war game conducted by the House Select Committee last April showed that the U.S. would run out of anti-ship cruise missiles in any major war very quickly, perhaps within a week. And last July, President Biden told CNN that Ukraine was running short of ammunition – since we were running short of the kind of ammunition they needed. Referring to the two million 155mm artillery rounds we had sent to Ukraine as of last July, Biden said, “They’re running out of that ammunition, and we’re low on it,” but Congress sent it anyway, “because they need it.” But what about a time in some future war when we may need it?

Neither political Party – and few candidates – seem to address our mounting debts, so 2024 remains a big decision year for American voters. Are we really satisfied with running up $2 trillion per year in red ink?

All content above represents the opinion of Gary Alexander of Navellier & Associates, Inc.

Please see important disclosures below.

Also In This Issue

About The Author

Gary Alexander

Gary Alexander has been Senior Writer at Navellier since 2009.  He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks.  For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.

Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s.  He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division.  Before that, he covered the economics beat for news magazines. All content of “Growth Mail” represents the opinion of Gary Alexander

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