Good morning. This is our first letter of 2024 and it would be traditional to devote it to some thoughts on what the year ahead will hold. But, having just received the news that we finished approximately last in the FT’s 2023 stock picking contest (see second item below), we are feeling a little jumpy about predictions. So, for now, we are going with questions rather than answers. Send us yours: robert.armstrong@ft.com and ethan.wu@ft.com.

Five questions for 2024

For risk assets in the US, 2022 was terrible and 2023 was great. We don’t know what’s next, but we do have some thoughts about what the determining factors are likely to be. We’ve stated these intimations in terms of five questions. Here goes:

What kind of rate cuts are we going to have? Consensus is that multiple cuts to the Federal Reserve’s policy rate are very likely. Equity markets are treating this as unambiguously good news. But rate cuts come in two flavours: disinflation-driven and downturn-driven. The latter kind are bad for stocks. The consensus bet seems to be for six 25 basis point rate cuts driven by pure disinflation, rather than concern over slowing or falling growth. Take a moment, however, to remember how the near-universal consensus of a year ago (recession) fared.