[Altos Weekly Traders Edge] Three Scenarios for Inflation, Jobs, and Growth..Details Inside

2024: Is the Recession Ghost Overblown? Three Scenarios for Inflation, Jobs, and Growth Weekly Market Overview Hi Traders, 2023 defied expectations. Instead of the predicted recession, we witnessed surprising resilience. GDP grew at a solid 2.9%, job creation remained steady at 189,000 per month, and unemployment hovered below 4%. Even inflation, the year's dominant concern, cooled significantly, plummeting from 5.4% to 2.6% by year's end. But what caused this unexpected turn of events? Economic models based on historical trends, particularly the usually reliable "inverted yield curve" indicator, completely missed the mark. This raises two crucial questions: Have traditional economic models become outdated in the face of evolving dynamics? Or was 2023 simply an anomaly? As we peer into 2024, the crystal ball remains cloudy. However, three main scenarios emerge, each with its own set of probabilities and implications: Scenario 1: A Modest Recession (42% probability) The persistent inverted yield curve looms large, casting a shadow of recession over 2024. This scenario suggests a potential downturn starting in Q2, characterized by rising unemployment, falling corporate profits, and stock market declines. Unlike the devastating recessions of the past, however, the financial sector appears healthier, mitigating the risk of a major economic crash. Scenario 2: A Soft Landing (38% probability) This would be the economic equivalent of a tightrope walk – a delicate balance between slowing growth and maintaining stability. In this scenario, the economy would experience a gentle deceleration, but unemployment would remain near current levels, inflation would gradually fall towards the Fed's 2% target, and interest rates and stock prices would stay afloat. This outcome hinges on two key factors: the continued good shape of the economy and the Fed's anticipated policy shift towards easing. Scenario 3: Sticky Inflation (12% probability) While overall inflation has cooled, service-sector prices remain stubbornly high, fueled by excess demand and rising wages. This scenario posits that service inflation could persist, dragging down overall inflation goals and limiting the Fed's room for monetary easing. As a result, both interest rates and stocks could face upward pressure. Bonus Scenario: The Unforeseen (8% probability) This category encompasses a range of possibilities beyond the three main scenarios. It could include a deeper recession, a "growth recession" with near-stagnation, or unforeseen events impacting supply or demand that unexpectedly accelerate or decelerate the economy. Embracing Uncertainty Predicting the future, especially the economic future, is always a fool's errand. Each of these scenarios has its own merits and potential downsides. While the specter of recession lingers, a soft landing remains a distinct possibility. Ultimately, the key to navigating the crossroads of 2024 lies in how inflation evolves and how the Fed responds. Remember, these are just probabilities, and the actual course of the economy in 2024 could be quite different. Stay with us for another year, and we might just get out of it unscathed. - The Team at Altos Trading In the next article: Ditch the "one-basket" mentality and embrace patience: 3 financial resolutions to navigate the 2024 market with wisdom and grace. Sponsor [Please take a moment to watch this…]( Some are calling it the greatest trading advancement of the last year… A 34 year old man from central Florida has uncovered a totally new way to trade options… Already this year it’s allowed real people to [capture top returns of 50%...100%... Even 200% overnight…]( By clicking the link above you agree to periodic updates from The TradingPub and its partners ([privacy policy]( Diversify, Say No, Hold On: 3 Financial Resolutions for Market Success in 2024 New year, new you? Not just for personal resolutions, this sentiment applies to your finances too. The 2023 market rollercoaster taught us valuable lessons, and as we cautiously step into 2024, three key resolutions can equip us for success: Resolution #1: The Enron Enigma and Asset Allocation Wisdom Remember the devastating losses for Enron employees who poured their 401(k)s into company stock? Blindsided by hype and misplaced trust, they fell victim to lopsided asset allocation. Don't repeat their mistake. Diversifying across asset classes - stocks, bonds, real estate, and more - protects against catastrophic losses. Imagine putting all your eggs in one basket, hoping it won't fall. Spread your portfolio wisely, embracing the safety net of diversification. Resolution #2: Saying "No" to Bad Risks: The Art of Disciplined Investing Chasing market-beating returns often lures us into "bad risks." These are enticing yet asymmetrical opportunities where potential downside far outweighs the meager upside. Think Niagara Falls in a barrel for $20 – the thrill? Unmatched. The chance of survival? Not so much. Disciplined investors know the dangers of these traps. They ask, "What can go wrong?" before "What can go right?" They understand selectivity; saying "no" to bad risks is crucial. Impatience drives many to justify overvalued stocks simply because worse options exist. But camping 40 feet closer to lions merely because others sit 20 feet away doesn't make it wise. Avoiding bad risks is the cornerstone of outperforming the market. Resolution #3: The Berkshire Hathaway Lesson: Embracing Patience Imagine holding on to a stock for a decade without a single penny earned. Sounds agonizing, right? Yet, for "Stock X" as I call it, many would endure. Why? Because "Stock X" is Berkshire Hathaway, Warren Buffett's vehicle to billionaire-dom. Over 36 years, Berkshire experienced numerous "slumps." A one-year dip might sting, but paled in comparison to the near decade-long slump from 1998 to 2009. Holding through such times requires patience. But that patience has reaped staggering rewards: 18,000% return compared to the S&P 500's 3,900%! As Buffett says, "Our favorite holding period is forever." While nobody enjoys losses, they're part of the journey. Without patience, you miss out on the extraordinary gains some businesses offer. Some things are worth the wait. So, as we navigate the 2024 financial warzone, let's remember these resolutions. Diversify wisely, avoid bad risks with disciplined "noes," and hold onto promising investments with patient grace. These are the keys to unlocking a brighter financial future in the year ahead. 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However, the publishers of the Altos Trading Alert Newsletter are not brokers or investment advisers, and do not provide investment advice or recommendations directed to any particular subscriber or in view of the particular circumstances of any particular person. Altos Trading, including its owner, does not participate in any trades issued through the alert services. Subscribers to Altos Trading or any other persons who buy, sell or hold securities should do so with caution and consult with a broker or investment adviser before doing so. Trading securities and options involves risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade securities and options, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Performance figures are based on actual recommendations. Due to the time critical nature of trading, brokerage fees, and the activity of other subscribers, there is no guarantee that subscribers will mirror the performance of the service. Performance numbers shown are based on trades subscribers could enter based on the trade alerts. Altos Trading, LLC assumes no responsibility for any losses incurred by any individual or entity as a result of trade alerts or strategies taught through courses or coaching services. 7154 W State Street Suite 169 Boise Idaho 83714 USA Disclaimer: The Altos Trading Alert Newsletter is published as an information service for subscribers, and it includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of the Altos Trading Alert Newsletter are not brokers or investment advisers, and do not provide investment advice or recommendations directed to any particular subscriber or in view of the particular circumstances of any particular person. Altos Trading, including its owner, does not participate in any trades issued through the alert services. Subscribers to Altos Trading or any other persons who buy, sell or hold securities should do so with caution and consult with a broker or investment adviser before doing so. Trading securities and options involves risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade securities and options, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Performance figures are based on actual recommendations. Due to the time critical nature of trading, brokerage fees, and the activity of other subscribers, there is no guarantee that subscribers will mirror the performance of the service. Performance numbers shown are based on trades subscribers could enter based on the trade alerts. Altos Trading, LLC assumes no responsibility for any losses incurred by any individual or entity as a result of trade alerts or strategies taught through courses or coaching services. 7154 W State Street Suite 169 Boise Idaho 83714 USA [Unsubscribe]( | [Change Subscriber Options](