We are on the verge of a potentially tumultuous period in the U.S. economy, with a series of global events coming to a head. It’s only January, but there’s a lot to consider. Tensions have been rising in the Middle East, particularly with the conflict between the United States and Houthi rebels in Yemen. Rising aggression from rebel forces has raised concerns about global supply chain disruptions, prompting the U.S. to respond, serving as a historical pattern to boost an incumbent president’s chances in an election year. Over in China, Taiwan’s presidential election has stoked tensions between China and the island nation, with the future of military involvement uncertain. Support for Ukraine is declining, and this could lead to increased conflict in the region. In the U.S., the Supreme Court will hear a case to determine if Donald Trump can run for president. His ongoing trials and the performance of the national economy will likely be pivotal factors in the upcoming presidential election.
Additionally, huge challenges lie ahead for the Chinese economy. A property crisis, weak consumer spending, and high youth unemployment could lead to an unprecedented stagnation, with financial experts expecting major market reforms to be initiated. However, the U.S. economy and stock market appear to be in a more stable position, with the Consumer Price Index trending downwards toward expected interest-rate cuts early this year, supporting a resilient job market. The focus is now on the fourth-quarter earnings season, which is expected to be impacted by the aforementioned global and domestic economic uncertainties. The bull market of the last 10 weeks will be faced with challenges as blue-chip technology companies post their numbers and guidance, presenting a potentially impactful factor in the market’s outlook for 2024.